Assume you gathered the historical weekly excess returns for IBM and for a S&P 500 portfolio using data over the last 2 years and plotted them as shown in the scatter plot below. Assume the trend line shown on the plot is from a CAPM motivated regression of the IBM excess returns on the market excess returns. Question: Which of the statements below best describes how the beta and alpha regression coefficients would be related to the figure? Excess returns on IBM 0.10 0.00 -0.10 -0.20 O 0 -0.2 CAPM regression for IBM 0 0 O -0.1 OBeta is the measure of total risk. O %8 O 8 0.0 O Excess returns on MARKET O O 0% O O 00 00 0.1 O O O The beta is the slope of the regression trend line. The alpha is the intercept of the line. O The alpha is the slope of the regression trend line. The beta is the intercept of the line. The beta is proportion of variation in the Y-axis variable explained by the model.

Assume you gathered the historical weekly excess returns for IBM and for a S\&P 500 portfolio using data over the last 2 years and plotted them as shown in the scatter plot below. Assume the trend line shown on the plot is from a CAPM motivated regression of the IBM excess returns on the market excess returns. Question: Which of the statements below best describes how the beta and alpha regression coefficients would be related to the figure? The beta is the slope of the regression trend line. The alpha is the intercept of the line. The alpha is the slope of the regression trend line. The beta is the intercept of the line. The beta is proportion of variation in the Y-axis variable explained by the model. Beta is the measure of total risk