Company_Return Market_Return Treasury_Bill_Return -0.040198 -0.086509 0.005919 -0.007736 0.021965 0.005804 0.180867 0.020322 0.006313 -0.022583 -0.031467 0.006822 0.054804 0.086169 0.006397 0.085256 -0.013191 0.005944 -0.071011 0.002915 0.006639 -0.097517 -0.102345 0.006055 -0.232851 -0.071479 0.005899 0.048197 -0.011402 0.006629 0.185132 0.057938 0.005747 0.154363 0.048658 0.005987 0.297492 0.030478 0.004623 0.031074 0.057157 0.004861 0.175281 0.012741 0.004333 -0.190722 0.001448 0.005279 -0.158719 0.046365 0.004469 -0.099884 -0.048837 0.004162 0.117854 0.064634 0.004871 0.167495 0.037858 0.004649 -0.068021 -0.022037 0.004546 0.055368 0.027832 0.004318 -0.022015 -0.028181 0.003917 0.125185 0.126348 0.003841 0.140281 -0.010462 0.003002 0.035196 0.013183 0.002823 -0.128845 -0.009899 0.003388 0.043728 -0.004443 0.003289 0.001786 0.017791 0.002739 -0.202337 -0.022504 0.003124 -0.043885 0.044072 0.002836 0.001966 -0.015694 0.002604 -0.038723 0.012543 0.002507 0.166772 0.007748 0.002202 0.112852 0.055541 0.002324 0.043588 0.028722 0.002235

(g) Careful analyses of stock prices often subtract the so-called risk-free rate from the returns on the stock. After the risk-free rate has been subtracted, the returns are sometimes called "excess returns" to distinguish them. The risk-free rate is the interest rate returned by a very safe investment, one with almost no chance of default. The return on short-term Treasury Bills is typically used as the risk-free rate. Subtract the risk-free rate from returns on company stock and the market, and then refit the equation using these excess returns. Does the equation change from the previous estimate? Explain why it is similar or different.

Complete the equation for the refitted line below.

Estimated Excess Company

Returnequals=nothingplus+nothing

Excess Market Return

(Round to four decimal places as needed.)

Enter your answer in the edit fields and then click Check An