4. You have just run a regression of weekly returns of EK Inc. against the S&P 500 over the last two years. You have misplaced some of the output and are trying to derive it from what you have.

a. You know the R squared of the regression is 0.48, and that your stock has a variance of 60%. The market variance is 20%. What is the beta of EK Inc.? (2 points)

b. You also remember that EK Inc. was not a very good investment during the period of the regression and that it did worse than expected (after adjusting for risk) by 0.01% a week for the two years of the regression. During this period, the average riskfree rate was 3.64%. What was the intercept on the regression? (2 points)

c. You are comparing EK Inc. to another firm called LMN Inc, which also has an R squared of 0.48. Will the two firms have the same beta? If not, why not? (1 point)