Question: Consider the two (excess return) index model regression results for A and B Ra -1.7% + 1.6RM R- square = 0.646 Residual standard deviation 12.8%

Consider the two (excess return) index model regression results for A and B Ra -1.7% + 1.6RM R- square = 0.646 Residual standard deviation 12.8% Rs 1.5% + 1.3RM R-square = 0.592 Residual standard deviation = 11.6% a. Which stock has more firm-specific risk? O Stock A O Stock B b. Which stock has greater market risk? O Stock A Stock B

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