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%.

Question

Quizplus · Accepted Answer

The slope of the linear regression line represents the beta of the stock. Therefore, Sprint's beta is 1.47. The intercept of the line does not provide any meaningful information regarding Sprint's beta or risk-free rate. The standard deviation of Sprint's excess returns cannot be calculated based on this information.

A Linear Regression Was Done to Estimate the Relation Between