On a graph with common stock returns on the Y- axis and market returns on the X-axis, the slope of the regression line represents the:
A) Alpha
B) Beta
C) R-squared
D) Adjusted beta

Question

Quizplus · Accepted Answer

The slope of the regression line on this type of graph represents the beta coefficient, which measures the sensitivity of the common stock's returns to market returns. Alpha represents the excess return of a stock above what is predicted by its beta, R-squared measures how well the regression line fits the data, and adjusted beta takes into account additional explanatory variables beyond the market return. However, none of these concepts are directly represented by the slope of the regression line on this type of graph.

On a Graph with Common Stock Returns on the Y-