Question

The weekly rates of return for ANF stock and the overall market are embedded. Weekly returns...

The weekly rates of return for ANF stock and the overall market are embedded. Weekly returns of the markets are based on the S&P Index.   Using linear regression analysis, please answer the following questions.

1. Write the equation for the relationship between ANF’s stock price and the overall market. In other words, what is the estimated relationship between ANF’s stock price and the overall market?

2. What percentage of the variability in ANF’s stock price can be explained by the relationship to the returns of the overall market? (Note: this is a measure of the stock’s market-related risk.)

3. Would you recommend using the estimated linear relationship as an estimate of the likely change in ANF’s stock price given an estimate of the likely change in the S&P index? Why or why not? Be specific in your answer.

Math   Statistics-And-Probability   
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