Solved: Which stock has more firm-specific risk, Financial Accounting

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Which stock has more firm-specific risk

Response to the following problem:

Consider the two (excess return) index model regression results for A and B:

RA =1% =1.2RM

R-SQR =.576

RESID STD DEV-N=10.3%

RB_=2% = .8RM

R-SQR =.436

RESID STD DEV-N =9.1%

a. Which stock has more firm-specific risk?

b. Which has greater market risk?

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Financial Accounting: Which stock has more firm-specific risk

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