Question
answer the questions please about Nokia company and give References link from answer 2. Estimating relative risk a. Run a regression of returns on your
answer the questions please about Nokia company and give References link from answer
2. Estimating relative risk
a. Run a regression of returns on your firms stock against returns on a market index, preferably using monthly data and 5 years of observations. Use the regression to evaluate your companys performance on a risk adjusted basis during the period of the regression and its riskiness, relative to the market, and break down the risk into firm specific and market components. To run the regression, you will need to get data on past returns for your stock and for a market index.
- What is the intercept of the regression? What does it tell you about the performance of this company's stock during the period of the regression?
- What is the slope of the regression?
- What does it tell you about the risk of the stock?
- How precise is this estimate of risk? (Provide a range for the estimate.)
- What portion of this firm's risk can be attributed to market factors? What portion to firm-specific factors? Why is this important?
- How much of the risk for this firm is due to business factors? How much of it is due to financial leverage?
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