Consider the two (excess return) index model regression results for A and B: RA = –1.8%...

Consider the two (excess return) index model regression results for A and B:

R_A = –1.8% + 2R_M

R-square = 0.640

Residual standard deviation = 12.6%

R_B = 1.4% + 1R_M

R-square = 0.590

Residual standard deviation = 11.4%

If r_f were constant at 6% and the regression had been run using total rather than excess returns, what would have been the regression intercept for stock A? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

Intercept _______%

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago

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