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:

Price

The financial cost of purchasing a product or service.

Apples

Commonly used as an example in economics, representing a tangible good that can be exchanged or consumed.

Bananas

A tropical fruit with a signature yellow peel and soft, sweet flesh, widely consumed around the world and rich in potassium.

Perfect Substitutes

Perfect substitutes are two goods that can be used in place of each other with no loss of utility or preference by consumers.