(Asmainfo) Regression gave these results: Intercept Slope(Beta) R Square .152 .013 -.0007 The intercept (alpha) represents the return in excess of the risk borne by investors if its value is positive and if its value is negative it represents the lesser returns for the risk borne. Intercept of ADIB is quite low here so it doesn’t affect the returns too much. The slope is the beta of ADIB stocks which is .152. Beta can be interpreted as the change in return of ADIB stocks due to change in Index return. The value of beta is quite low for ADIB thus ADIB stock return is not very much dependent upon market returns. R Square is the coefficient of determination. It tells us the level of stock return dependency on the market return. In other words it measures the level of systematic risk. The systematic risk is quite lower for the ADIB stocks due to lower R Square value. Company specific risk or non systematic risk can be found by 1-r square, which is .987 or 98.7%. This means that most of the beta risk is defined by business and financial factors of the business not the market. The beta is actually levered beta which means it has two components in it; one is the risk due to financial leverage and second is the risk due to business factors. Beta asset (unlevered beta) can be calculated as follows:
(Asmainfo) Regression gave these results: Intercept Slope(Beta) R Square -.0007 .152 .013 The intercept (alpha) represents the return in excess of the risk borne by investors if its value is positive and if its value is negative it represents the lesser returns for the risk borne. Intercept of ADIB is quite low here so it doesn’t affect the returns too much. The slope is the beta of ADIB stocks which is .152. Beta can be interpreted as the change in return of ADIB stocks due to change in Index return. The value of beta is quite low for ADIB thus ADIB stock return is not very much dependent upon market returns. R Square is the coefficient of determination. It tells us the level of stock return dependency on the market return. In other words it measures the level of systematic risk. The systematic risk is quite lower for the ADIB stocks due to lower R Square value. Company specific risk or non systematic risk can be found by 1-r square, which is .987 or 98.7%. This means that most of the beta risk is defined by business and financial factors of the business not the market. The beta is actually levered beta which means it has two components in it; one is the risk due to financial leverage and second is the risk due to business factors. Beta asset (unlevered beta) can be calculated as follows:
my-corporate-finance-project.docx