Excess Returns (0) SCL Intercept . Excess returns on market index e "R;= a;+BRm+e What can you say about the graph above? The residuals indicate that the stock must have been overpriced Residuals represent firm specific events that have affected the stock returns in each time period Intercept is equal to Rf rate Equation for the line on the graph is the CAPM equation Graph helps us visualize multifactor model results Excess Returns (0) SCL Intercept . Excess returns on market index e "R;= a;+BRm+e What can you say about the graph above? The residuals indicate that the stock must have been overpriced Residuals represent firm specific events that have affected the stock returns in each time period Intercept is equal to Rf rate Equation for the line on the graph is the CAPM equation Graph helps us visualize multifactor model results