Aswath Damodaran 125
A Few Questions
! The R squared for Deutsche Bank is very high ( 62 %), at least relative to U.S.
firms. Why is that?
! The beta for Deutsche Bank is 1. 04.
- Is this an appropriate measure of risk?
- If not, why not?
! If you were an investor in primarily U.S. stocks, would this be an appropriate
measure of risk?
The R-squared is high, because Deutsche Bank is such a large percentage of the
index.
This beta is a reasonable measure of risk only to those whose entire portfolio is
composed of large German companies.
If you were primarily a US investor, you would look at the risk that DBK would
add on to a US index.
