You have the following output of a regression for two stocks A and B: RA = 1%+1.2RM
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You have the following output of a regression for two stocks A and B: RA = 1%+1.2RM , R-square(A) = 0.575, Residual standard deviation (A) = 10.3%, RB = 2% + 0.82RM , R-square(B) = 0.436, and Residual standard deviation (B) = 9.1%.
1.Which of these stocks has more firm-specific risk?
2.Which one is affected more by the market risk?
3.A greater portion of the return of which stock is explained by the market movements?
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