Financial Risk Manager Part 1
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A risk manager is estimating the sensitivity of a stock's return to the return on the S&P 500 Index. The manager performs this task using an ordinary least squares (OLS) regression. Which of the following descriptions of the OLS procedure is correct?
A risk manager is estimating the sensitivity of a stock's return to the return on the S&P 500 Index. The manager performs this task using an ordinary least squares (OLS) regression. Which of the following descriptions of the OLS procedure is correct?
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A
OLS minimizes the square of the sum of differences between the actual and estimated S&P 500 Index returns.
B
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