The slope of the regression line that exhibits the past relationship between a stock's return and the market's return is the:

Question

Quizplus · Accepted Answer

The slope of the regression line is the stock's beta, which is a measure of the stock's systematic risk. Beta measures the sensitivity of the stock's returns to changes in the market's returns, and is an important input in the calculation of the security market line. The market risk premium and the stock's unique risk are not directly related to the slope of the regression line.

The Slope of the Regression Line That Exhibits the Past