Parameter estimation

XRAAPLt = ? + ?*XRMKTt + ?SMB*SMBt + ?HML*HMLt + ?t From the parameter estimation, we have the following: Variable Parameter Coefficients Standard Errors t-Statistics Intercept ? 1.2664 0.6423 1.9717 XRMKTt ? 1.2546 0.1455 8.6218 SMBt ?SMB 0.4690 0.2264 2.0718 HMLt ?HML -0.4428 0.1800 -2.4600 R 2 0.2395 F-ratio 35.8988 Number of observations 346 Durbin-Watson 1.8911 1) 1nterpret the model from a financial perspective. That is, what are these four estimated coefficients telling you about Apples systematic stock market performance? Does each make theoretical and intuitive sense? Explain your answers. (Note that a non-zero intercept or alpha denotes the presence of arbitrage opportunities.) 2 Comment briefly on the statistical significance of the intercept and each of the independent variables as indicated by their t-ratios and on the statistical significance of the model as a whole as indicated by the F-ratio. What is the interpretation of R 2 ? •