For the SLR model yi = B 0 + B 1 x i + u i with y i as the IBM stock return and x i as The market return(CAPM) that are both in original units, e.05...

For the SLR model yi = B0+ B1xi+ ui with yi as the IBM stock return and xi as

The market return(CAPM) that are both in original units, e.g., 0.05 means 5% monthly return.

Show that ∆yi/∆xi =B1, i.e., the slope coefficent captures the units of changes in yi

corresponding to one unit change of xi

Suppose we only change the unit of xi to percentage points, i.e., the market return xi will be 5 for the 5% monthly return. Does this change the values of B0 and B1? If so, by how much?

Suppose we only change the unit of yi to percentage points, i.e., the IBM stock return yi will be 5 for the 5% monthly return. Does this change the values of B0 and B2? If so, by how much?

Do the two changes of units above make R2 different? Use the definition of R2 to prove it.