The slope of the regression line that exhibits the past relationship between a stock's return and the market's return is the:
A)security market line.
B)stock's Beta.
C)market risk premium.
D)stock's unique risk.

Question

Quizplus · Accepted Answer

The slope of the regression line is known as the Beta of the stock, which measures the stock's systematic risk relative to the market. The security market line and market risk premium are related to the CAPM model, which uses the Beta as a key input. Unique risk is the risk specific to the individual stock, which is not captured in the Beta. Therefore, option B is the correct answer.

The Slope of the Regression Line That Exhibits the Past