Question

A linear regression to estimate the relation between General​ Motors' stock returns and the​ market's return gives the best fitting line that represents the relation between the stock and the market. The slope of this line is our estimate of​ ________.

Answer 1

Full question:

A linear regression to estimate the relation between General Motors' stock returns and the market's return gives the best fitting line that represents the relation between the stock and the market. The slope of this line is our estimate of ________.

A) alpha

B) beta

C) risk-free rate

D) volatility

Answer:

A linear regression to estimate the relation between General Motors' stock returns and the market's return gives the best fitting line that represents the relation between the stock and the market. The slope of this line is our estimate of beta

Explanation:

Beta is a broadly applied amount in investment commentary. In economics, the beta of a firm applies to the subtlety of its heritage price concerning an average or benchmark. SLOPE which describes the linear regression implemented among the two variables.

Manipulating beta tacts can be beneficial as a member of a wider investment strategy to restrain downside risk or accomplish short-term gains, but it's essential to retrieve that it is also controlled to the same levels of market levity as any other trading strategy. A beta may yield varying results because of the fluctuations in determining it, such as various periods practiced to estimate data.