The index model for stocks A and B is estimated from excess return with the following...
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The index model for stocks A and B is estimated from excess return with the following results: RA-0.01+0.8RM = 0.04+1.1RM RB R-squared B = 0.3 R-squared 0.15 Market-index risk (M) is 0.2 Which stock has a greater market risk? Explain your answer. Are these stocks cyclical or defensive? The index model for stocks A and B is estimated from excess return with the following results: RA-0.01+0.8RM = 0.04+1.1RM RB R-squared B = 0.3 R-squared 0.15 Market-index risk (M) is 0.2 Which stock has a greater market risk? Explain your answer. Are these stocks cyclical or defensive?
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Answer To determine which stock has a greater market risk we need to compare the beta coefficients o... View the full answer
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