Q$3)$ Suppose there are two economies, A and B$.$ Economy A is more financially stable than B$.$

Let's assume we estimate the $R^2$ of the individual stocks returns with the market indices returns

of economy A and $B,$ respectively. Where do you think the average $(R^2)$ of stocks will be

higher? Assuming that you are a CEO of a firm and want to list your stock in the exchange.

Where do you list your stock and why?

$(1+1+3)=5$

Ans: average $(R^2)$ will be higher in the economy:

Ans: You want to list your stock in the economy:

Why?