TESLA SUMMARY OUTPUT Regression Statistics Multiple R 0 231825432 R Square 0 053743031 Adjusted R Square 0 037428255 Standard Error 0 164962621 Observations 60 ANOVA df SS MS F Significance F Regression 1 0 089642128 0 089642 3 294132 0 074699515 Residual 58 1 578334656 0 027213 Total 59 1 667976783 Coefficients Standard Error t Stat P value Lower 95 Upper 95 Lower 95 0 Upper 95 0 Intercept 0 029619346 0 022746497 1 30215 0 198013 0 015912715 0 075151 0 01591272 0 075151406 X Variable 1 1 309325232 0 721401447 1 814975 0 0747 0 134716657 2 753367 0 13471666 2 753367121 Using above given linear regression summary output, write out the FF3F model equation for Tesla Using the following factor information make a forecast of Teslas next years returns Market excess return (8 01 EAR), SMB (1 97 EAR), HML (9 93 EAR), Risk free rate (0 2 EAR) Given the analysts projected return for Tesla for FY 2017 of 8 7 EAR, determine whether the stock is over or undervalued in comparison to the FF3Fs projection The analysts' current recommendation for Tesla is to hold the stock Do you agree with this recommendation

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Question: TESLA SUMMARY OUTPUT Regression Statistics Multiple R 0.231825432 R Square 0.053743031 Adjusted R Square 0.037428255 Standard Error 0.164962621 Observations 60 ANOVA df SS MS F

TESLA
SUMMARY OUTPUT

Regression Statistics
Multiple R	0.231825432
R Square	0.053743031
Adjusted R Square	0.037428255
Standard Error	0.164962621
Observations	60

ANOVA
	df	SS	MS	F	Significance F
Regression	1	0.089642128	0.089642	3.294132	0.074699515
Residual	58	1.578334656	0.027213
Total	59	1.667976783

	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%	Lower 95.0%	Upper 95.0%
Intercept	0.029619346	0.022746497	1.30215	0.198013	-0.015912715	0.075151	-0.01591272	0.075151406
X Variable 1	1.309325232	0.721401447	1.814975	0.0747	-0.134716657	2.753367	-0.13471666	2.753367121

Using above given linear regression summary output, write out the FF3F model equation for Tesla. Using the following factor information make a forecast of Teslas next years returns: Market excess return (8.01% EAR), SMB (1.97% EAR), HML (9.93% EAR), Risk-free rate (0.2% EAR).

Given the analysts projected return for Tesla for FY 2017 of -8.7% EAR, determine whether the stock is over or undervalued in comparison to the FF3Fs projection. The analysts' current recommendation for Tesla is to hold the stock. Do you agree with this recommendation?

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