1. The beta of ABC stock has been estimated as 1.2 using regression analysis on a sample of historical returns for the S&P 500. What is the interpretation of this equity beta? (5 points)
   1. As the S&P 500 increases by 1%, ABC increases by 0.2%.
   2. As the S&P 500 increases by 1%, ABC decreases by 0.2%.
   3. As the S&P 500 increases by 1%, ABC decreases by 1.2%.
   4. As the S&P 500 increases by 1.2%, ABC increases by 1%.
   5. As the S&P 500 increases by 1%, ABC increases by 1.2%.