Question: 3 6 . Consider the two ( excess return ) index model regression results for A and B: RA = 1 % + 1 .

36. Consider the two (excess return) index model regression results for A and B: RA =1%+1.2RM R-square =0.576 Residual standard deviation =10.3% RB =2%+0.8RM R-square =0.436 Residual standard deviation =9.1% a. Which stock has more firm-specific risk? b. Which stock has greater market risk? c. For which stock does market movement has a greater fraction of return variability?

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