The accompanying data set tracks the monthly performance of stock in a large computer company. The data include 36 monthly returns on the company, as well as returns on the entire stock market and returns on short-term Treasury Bills

• Answer only part (G)

Company_Return	Market_Return	Treasury_Bill_Return
-0.023607	-0.068696	0.005792
0.022411	-0.004685	0.005801
0.164505	0.022487	0.006472
-0.037761	-0.032036	0.006918
0.056211	0.107679	0.006328
0.094004	-0.010901	0.005971
-0.060475	-0.019781	0.006799
-0.111984	-0.107395	0.006182
-0.213267	-0.051039	0.005999
0.040695	-0.011821	0.006556
0.199821	0.076151	0.005617
0.168801	0.026566	0.005992
0.275466	0.034302	0.004691
0.042765	0.082598	0.004741
0.176775	0.045853	0.004475
-0.186745	0.011198	0.005276
-0.152101	0.028522	0.004434
-0.100761	-0.054419	0.004232
0.104731	0.030329	0.004743
0.144793	0.036524	0.004549
-0.059113	-0.000404	0.004512
0.039505	-0.000389	0.004293
-0.000673	-0.039935	0.003885
0.114885	0.124248	0.003698
0.165128	0.015484	0.002976
0.039484	0.005452	0.002881
-0.143071	-0.012418	0.003459
0.042929	0.022382	0.003215
0.010964	0.015736	0.002828
-0.213257	-0.004454	0.003248
-0.043096	0.045309	0.002797
-0.021745	-0.037969	0.002659
-0.028543	0.025264	0.002481
0.155771	-0.001442	0.002321
0.089857	0.047138	0.002351
0.026427	0.014842	0.002334

(a) Begin by inspecting timeplots of the variables Company Return and Market Return. Do the timeplots show trends that would be obscured in the scatterplot of Company Return and Market Return? Construct the timeplot for Company Return. Choose the correct graph below. O A. O B. O C. 0.32 0.32- 0.32 0.32 Company Return Company Return Company Return Company Return -0.32- -0.32- -0.32- -0.32- Time Time Time Time Do there appear to be any trends in Company Return? O A. Company Return tends to increase with time. O B. Company Return initially tends to decrease with time, and then the trend reverses and it begins to increase. O C. Company Return tends to decrease with time. D. There do not appear to be any trends that would be obscured in the scatterplot.Choose the correct timeplot for Market Return below. O A. O B. O C. D 0.15 1 0.15- 0.15- 0.15- Market Return Market Return Market Return 40 Market Return -0. 15- -0. 15- Time Time -0. 15- Time -0. 15- Time Do there appear to be any trends in Market Return? O A. Market Return tends to increase with time. O B. Market Return tends to decrease with time. O C. Market Return initially tends to decrease with time, and then the trend reverses and it begins to increase. D. There do not appear to be any trends that would be obscured in the scatterplot.(b) Create a scatterplot for Company Return on Market Return. Does a line seem to be a good summary of the association between these variables? Choose the correct graph below. O A. O B. &C. OD. 10.32- 0.32- 0.32 Company Return Company Return Company Return Company Return -0/45 -0.15 10.15 -0.15 0.15 -0.15 4 0.15 Market Return Market Return Market Return Market Return Does a line seem to be a good summary of the association between these variables? O A. The scatterplot shows no obvious pattern, so there is no association and a line does not summarize any association. O B. The scatterplot shows weak association, but there is a curved pattern, so a line does not summarize the association. C. The scatterplot shows weak association. A line seems to be a reasonable summary of the association. O D. The scatterplot shows strong association and a line is a reasonable summary of the association.(c) Estimate the least squares linear equation for Company Return on Market Return. Interpret the intercept and slope. Be sure to include their units. Note if either estimate represents a large extrapolation and is consequently not reliable. Complete the equation for the fitted line below. Estimated Company Return = 0.0087 + 1.2933 Market Return (Round to four decimal places as needed.) What is the correct interpretation of the intercept? Select the correct choice below and fill in the answer box to complete your choice. (Round to two decimal places as needed.) A. The intercept indicates that, on average, in months in which the market return increases by 1%, company return increases by % O B. The intercept indicates that, on average, in months in which company return increases by 1%, market return increases by % O C. The intercept of % is a large extrapolation and not directly interpretable. D. The intercept estimates that with a market return of 0, the company would have about a .87 % return.What is the correct interpretation of the slope? Select the correct choice below and fill in the answer box to complete your choice. (Round to four decimal places as needed.) O A. The slope indicates that, on average, in months in which company return increases by 1%, market return increases by % O B. The slope of % is a large extrapolation and not directly interpretable. C. The slope indicates that, on average, in months in which market return increases by 1%, company return increases by 1.2933 %. O D. The slope estimates that the market return would have to be greater than % in order for the company to have a positive return. (d) Interpret r and se associated with the fitted equation. Attach units to these summary statistics as appropriate. Calculate 2 12 = 0.248 with no units (Round to three decimal places as needed.)What is the correct interpretation of the summary value r2? Select the correct choice below and ll in the answer box to complete your choice. (Round to one decimal place as needed.) I A- The value of r2 means that the average residual is I'vB- The value of r2 means that the equation describes about 24.8 % of the variation. Calculate s6. s9 = 0.1069 with no units (Round to four decimal places as needed.) What is the correct interpretation of the summary value se? Select the correct choice below and ll in the answer boxes to complete your choice. (Round to four decimal places as needed.) I'vA- The value of 58 means that the standard deviation of the residuals is 0.1069 . (e) If months in which the market return went down by 2% were compared to months in which the market return went up by 2%, how would this equation suggest company return would differ between these periods? The company return between these periods would differ by 5.173 % (Round to three decimal places as needed.) (f) Plot the residuals from the regression fit in part (c) on Market Return. Does this plot suggest that the residuals possess simple variation? Choose the correct graph below. O A. O B. O c. VD 10.25- 0.25 0.25- Residual Residual Residual Residual 0.15 10.15 -0.15 0.15 0.15 0 15 0.15 0.15 10.25- 10.25- Market Return Market Return Market Return Market ReturnDoes this plot suggest that the residuals possess simple variation? O A. No, because the plot shows an obvious bend O B. No, because the plot shows decreasing variation. O C. No, because the plot shows increasing variation. D. Yes, because the plot shows consistent vertical scatter with no obvious pattern. O E. No, because the plot shows a linear pattern. (9) Careful analyses of stock prices often subtract the so-called risk-free rate from the returns on the stock. After the risk-free rate has been subtracted, the returns are sometimes called "excess returns" to distinguish them. The risk-free rate is the interest rate returned by a very safe investment, one with almost no chance of default. The return on short-term Treasury Bills is typically used as the risk-free rate. Subtract the risk-free rate from returns on company stock and the market, and then refit the equation using these excess returns. Does the equation change from the previous estimate? Explain why it is similar or different. Complete the equation for the refitted line below. Estimated Excess Company Return = | + | Excess Market Return (Round to four decimal places as