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Please show all of your work on paper! Thank you! 2. Suppose we test for risk predictability in a stock, and get the regression equation

image text in transcribed Please show all of your work on paper! Thank you!

2. Suppose we test for risk predictability in a stock, and get the regression equation below. Suppose r = 0.05. Compute the one step and two step ahead risk forecasts, i.e. E{(r&+1) and E(+2) rt1 = 0.02 +0.25r +&+1

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