Estimating Beta through Statistical Regression

When using regression analysis to see how a security's returns compare with those of the broad market, the estimate of the security's beta is _most likely_ the:

Correct. The beta shows how the security's return tends to change in a response to a change in the market's return. In regression analysis, using the market returns and the security returns, this estimate of sensitivity is found as the slope of the regression's "best fit line."

Incorrect. x-intercepts implicitly occur in nearly every linear regression, as the "best fit line" must pass through the x-axis somewhere. But this has little meaning in most regressions, and is not used directly in the estimation of beta when using market regression.

Incorrect. The y-intercept is the constant in the regression equation. Due to an imperfect relationship between market returns and a security's returns, it is common to find a y-intercept to the estimated "best fit line," but this value is unrelated to the estimated beta of the security.

slope.

x-intercept.

y-intercept.