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After running a linear regression with 1-factor, with the market premium, if beta is negative, then? the stock and the market are positively correlated (move in the same direction) O the stock and the market are negatively correlated (move in the opposite direction) no meaning O not enough information O You must construct additional Pylons

After running a linear regression with 1-factor, with the market premium, if beta is negative, then? the stock and the market are positively correlated (move in the same direction) O the stock and the market are negatively correlated (move in the opposite direction) no meaning O not enough information O You must construct additional Pylons

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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### Linear Regression and Market Correlation: Understanding Beta #### Question: After running a linear regression with a 1-factor model using the market premium, if beta is negative, then? #### Options: - **The stock and the market are positively correlated** (move in the same direction) - **The stock and the market are negatively correlated** (move in the opposite direction) - **No meaning** - **Not enough information** - **You must construct additional Pylons** #### Explanation: This question explores the relationship between a stock and the market as determined by a linear regression model. In this context: - **Negative Beta**: Indicates a **negative correlation** between the stock and the market. This means they move in opposite directions. For example, when the market goes up, the stock tends to go down, and vice versa. The option "You must construct additional Pylons" is likely a humorous reference without relevance to the financial context.
Transcribed Image Text:### Linear Regression and Market Correlation: Understanding Beta #### Question: After running a linear regression with a 1-factor model using the market premium, if beta is negative, then? #### Options: - **The stock and the market are positively correlated** (move in the same direction) - **The stock and the market are negatively correlated** (move in the opposite direction) - **No meaning** - **Not enough information** - **You must construct additional Pylons** #### Explanation: This question explores the relationship between a stock and the market as determined by a linear regression model. In this context: - **Negative Beta**: Indicates a **negative correlation** between the stock and the market. This means they move in opposite directions. For example, when the market goes up, the stock tends to go down, and vice versa. The option "You must construct additional Pylons" is likely a humorous reference without relevance to the financial context.
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