You are analyzing whether the difference in returns on stocks of a particular country can be explained by two common factors, with a linear-factor model. Your candidates for the two factors are changes in interest rates and changes in the approval rating of the country's president, as measured by polls. The following table gives the interest rate, the percentage of people approving the president's performance, and the prices of three stocks (A, B, and C) for the past 10 periods.

Try to assess whether the two factors have an influence on stock returns. To do so. Estimate the factor exposures for each of the three stocks by doing a time-series regression for the return on each stock against the changes in the two factors.

174 73 39 162 3214 7174 3320 4547 4274614842 2112112211 95142 11211 2 7219 4554 92577 47446 3252425631 7557557755 1234567890