Assume a regression is run of the firm's stock price percentage change on the percentage change in the foreign currency.The coefficient is negative.This implies that the company's stock price increases if the foreign currency appreciates.

Question

Quizplus · Accepted Answer

The negative coefficient implies that there is an inverse relationship between the stock price percentage change and the percentage change in the foreign currency. Therefore, if the foreign currency appreciates (i.e. percentage change is positive), the stock price percentage change is expected to decrease, not increase.

Assume a Regression Is Run of the Firm's Stock Price