You run a regression of monthly returns of firm A on the S&P 500 index...
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Finance
You run a regression of monthly returns of firm A on the S&P 500 index with an expected return of 12% and obtain the following output:
- Intercept of the regression = 0.052
- Coefficient on the market return = 0.5
a. What would an investor in firm A's stock require as a return, if the T-Bond rate is 2%?
b. Did your stock perform better than the market? Explain.
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