You regress the excess returns of Tesla and Apple on the market excess returns. Tesla generates an R² of 0.15 whereas Apple's R² is 0.35. At the same time, you find that Tesla's alpha is 4% whereas Apple's alpha is 15%. This means that Tesla has idiosyncratic risk than Apple. This also means that is a better buy opportunity.

Multiple Choice

• higher; Apple

• higher; Tesla

• lower; Apple

• lower; Tesla