A Linear Regression Was Done to Estimate the Relation Between

question 32

Multiple Choice

A linear regression was done to estimate the relation between Sprint's stock returns and the market's return. The intercept of the line was found to be 0.23 and the slope was 1.47. Which of the following statements is true regarding Sprint's stock?

• A) Sprint's beta is 0.23.
• B) Sprint's beta is 1.47.
• C) The risk-free rate is 1.47%.
• D) The standard deviation of Sprint's excess returns is 23%.

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Definitions:

Poisson Distribution

A statistical distribution describing the probability of a given number of events happening in a fixed interval of time or space, assuming events occur with a constant mean rate and independently of the time since the last event.

Mean

The average of a set of numbers, calculated by dividing the sum of all the numbers by the count of numbers.

Poisson Probability Tables

Tables that provide the probabilities of different numbers of events happening in a fixed interval of time or space, assuming these events occur with a known constant rate and independently of the time since the last event.

Occurrences

Incidents or instances of something happening.