Analysts may use regression analysis to estimate the index model for a stock. When doing so, the slope of the regression line is an estimate of
A) the α of the asset.
B) the β of the asset.
C) the σ of the asset.
D) the δ of the asset.

Question

Quizplus · Accepted Answer

The slope of the regression line in the context of the index model for a stock represents the beta (β) of the asset. Beta measures the asset's volatility in relation to the market, indicating how much the asset's returns are expected to move relative to market movements.

Analysts May Use Regression Analysis to Estimate the Index Model