A linear regression was done to estimate the relation between Sprint's stock returns and the market's return.The intercept of the line was found to be 0.23 and the slope was 1.47.Which of the following statements is TRUE regarding Sprint's stock?
A)Sprint's beta is 0.23.
B)Sprint's beta is 1.47.
C)The risk-free rate is 1.47%.
D)The standard deviation of Sprint's excess returns is 23%.
E)Sprint's beta is between 0.23 and 1.47.

Question

Quizplus · Accepted Answer

The slope of the line represents the beta of Sprint's stock. Therefore, Sprint's beta is 1.47. The intercept does not provide any information about the beta or risk-free rate. There is no information provided about the standard deviation of Sprint's excess returns to choose option D. Option E is not relevant as the beta is already given as 1.47.

A Linear Regression Was Done to Estimate the Relation Between