On a graph with common stock returns on the y-axis and market returns on the x-axis, the slope of the regression line represents
A)alpha.
B)beta.
C)R-squared.
D)standard error.

Question

Quizplus · Accepted Answer

The slope of the regression line represents beta, which measures the sensitivity of the stock's returns to changes in the market returns. Alpha represents the intercept of the regression line, R-squared measures the goodness of fit of the regression line, and standard error measures the degree of variability in the regression line. None of these are represented by the slope of the regression line.

On a Graph with Common Stock Returns on the Y-Axis