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solve in 40 mins I will give you thumb up Question 4 You nave just run a regression of manthily returns on stock x. a-software
solve in 40 mins I will give you thumb up
Question 4 You nave just run a regression of manthily returns on stock x. a-software firm in the US, against returns on the SsP 500 over the period from 20162019, and arrived at the following result: Ran=0.089%+1.50Rsse The regression has an R-squared of 32%. The monthly riskfree rate during the period of the regression was 0.50%. The current T.Bill rate is 5.5% and the current. T.Bond rate is 6.5%. The current annual return on the S8P500 index is 12%. a). Based on the regression resuits, did stock X perform better or worse than expected over the estimation period? And by how much? [20 Marks] J). Based on the regression results; did stock X perform better or worse than expected over the estimation period? And by how much? [20 Marks] b). What is your expectation for stock X 's return in the future? [20 Marks] c). What is the proportion of stock X's total risk that is systematic risk? And what is the proportion of firm-specific risk? [20 Marks] d). In estimating beta for stocks using regressions, should we choose a long or a short period and why? [20 Marks] ). Please provide two alternative ways that the underlying firm of stock X can use to reduce s beta. [20 Marks] Question 4 You nave just run a regression of manthily returns on stock x. a-software firm in the US, against returns on the SsP 500 over the period from 20162019, and arrived at the following result: Ran=0.089%+1.50Rsse The regression has an R-squared of 32%. The monthly riskfree rate during the period of the regression was 0.50%. The current T.Bill rate is 5.5% and the current. T.Bond rate is 6.5%. The current annual return on the S8P500 index is 12%. a). Based on the regression resuits, did stock X perform better or worse than expected over the estimation period? And by how much? [20 Marks] J). Based on the regression results; did stock X perform better or worse than expected over the estimation period? And by how much? [20 Marks] b). What is your expectation for stock X 's return in the future? [20 Marks] c). What is the proportion of stock X's total risk that is systematic risk? And what is the proportion of firm-specific risk? [20 Marks] d). In estimating beta for stocks using regressions, should we choose a long or a short period and why? [20 Marks] ). Please provide two alternative ways that the underlying firm of stock X can use to reduce s beta. [20 Marks]Step by Step Solution
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