Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 126

Deutsche Bank: Alternate views of Risk

DAX FTSE Euro

300

MSCI

Intercept (^1). 24 % 1. 54 % 1. 37 %
Beta 1. 05 1. 52 1. 23
Std Error of
Beta
0. 11 0. 19 0. 25
R Squared 62 % 52 % 30 %

As the index used expands and becomes broader, the R-squared drops off and

the standard error increases. The least precise beta estimate (with the highest

standard error) may be the most meaningful.