Q1 The following regression equation describes the daily returns of stock XYZ , rxyz, in terms of an index returndex and a mean zero disturbance term, &: rxyz = a + Blindex + & where a and B are constants, & is mean zero with a standard deviation of 1.0% , a is 0.01% , and B is 1.20. If the index return on a given day is 5% , what is the expected return of XYZ ? E [ xyz | index] 6.01%