You have regressed the excess returns for two stocks on the corresponding excess returns for the market with the following results:

RA = 0.01 + 1.2(RM); R2 = 0.576; residual standard deviation = 0.103 RB = 0.02 + 0.8(RM); R2 = 0.436; residual standard deviation = 0.0.091

a. Which stock has more firm-specific risk?

b. Which firm has more market risk?

c. The market explains a greater percentage of the volatility of returns for which stock?

d. Assume the risk free rate is constant at 6%. Determine the regression intercept for stock A, if you had used total returns instead of excess returns.