Consider the two (excess return) index model regression results for A and B: RA = 1% + 1.3RM R-square = 0.602 Residual standard deviation = 11.2% RB = 1.5% + 0.7RM R-square = 0.466 Residual standard deviation = 9.3%

a. Which stock has more firm-specific risk?

b. Which stock has greater market risk?

c. For which stock does market movement has a greater fraction of return variability?

d. If rf were constant at 4.6% and the regression had been run using total rather than excess returns, what would have been the regression intercept for stock A?