As a financial consultant you have customers with different investment risk preferences. You have a client who is interested in purchasing either AT&T stock or Google stock. This client, however, is risk adverse. Clients who are 'risk adverse' try to minimize their risk. To determine the relative risk/volatility between the 2 stock options, you use regression analysis to estimate the percent gain/loss of each stock as compared to the market: the S&P 500 percent gain/loss. The results of your regression models are given in the table below. Level of
As a financial consultant you have customers with different investment risk preferences. You have a client who is interested in purchasing either AT&T stock or Google stock. This client, however, is risk adverse. Clients who are 'risk adverse' try to minimize their risk. To determine the relative risk/volatility between the 2 stock options, you use regression analysis to estimate the percent gain/loss of each stock as compared to the market: the S&P 500 percent gain/loss. The results of your regression models are given in the table below. Level of
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
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As a financial consultant you have customers with different investment risk preferences. You
have a client who is interested in purchasing either AT&T stock or Google stock. This client,
however, is risk adverse. Clients who are 'risk adverse' try to minimize their risk.
To determine the relative risk/volatility between the 2 stock options, you use regression analysis
to estimate the percent gain/loss of each stock as compared to the market: the S&P 500 percent
gain/loss. The results of your regression models are given in the table below. Level of
significance is .05.
Model 1: Dependent Variable AT&T
Model 2: Dependent Variable Google Percent
Gain/Loss
Percent Gain/Loss
R-Squared
S&P 500 Percent Gain/Loss B 91
31
R-Squared
S&P 500 Percent Gain/Loss B
p-value for ß
.35
1.09
p-value for B
.02
.02
Explain and interpret the regression output for each model. Which stock would you recommend
to your client?
2AHLCLH C - -
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