When the annualized monthly percentage rates of return for a stock market index were regressed against the returns for ABC and XYZ stocks over a 5 year period ending in 2010, using an ordinary least squares regression, the following results were obtained Explain what these regression results tell t...

The regression results provide quantitative measures of return and risk based on monthly returns over the fiveyear period for ABC was 060 considerably ...

When the annualized monthly percentage rates of return for a stock market index were regressed against the

Question:

When the annualized monthly percentage rates of return for a stock market index were regressed against the returns for ABC and XYZ over a 5-year period ending in 2010, using an ordinary least squares regression, the following results were obtained:

Explain what these regression results tell the analyst about risk€“return relationships for each stock over the sample period. Comment on their implications for future risk€“return relationships, assuming both stocks were included in a diversified common stock portfolio, especially in view of the following additional data obtained from two brokerage houses, which are based on 2 years of weekly data ending in December2010.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...