Question

When using regression analysis with stock returns as inputs, the _____ beta is estimated.

a) Market
b) Asset
c) Debt
d) Equity

Answer 1

In the context of regression analysis with stock returns, the equity beta is estimated. It reflects the stock's volatility relative to the market.

Step-by-step explanation:

When using regression analysis with stock returns as inputs, the equity beta is estimated. This beta measures the volatility of a stock's returns relative to the returns of the overall market, which is a foundation of the Capital Asset Pricing Model (CAPM). In finance, it's important because it provides an indication of how a stock's returns move with the market. A higher equity beta indicates that the stock is more volatile compared to the market.