Use one stock, the US 3-m Treasury bill, the market index and any two macroeconomic variables to answer the questions

1. Examine the graphs and the descriptive statistics of the excess returns of both the stock and the market and discuss your findings. (15 points)

2. Then, set up a simple regression model to empirically investigate the influence of the market on the stock and explain the rationale for doing so. Write out that model in an algebraic format. Next, run the regression model and express the results in an estimated regression model format. What is the estimate of the slope coefficient and what does it connote? (25 points)

3. Examine whether the market excess returns is statistically significant. Also, what is the interpretation of the intercept estimate? Is it also statistically significant? (10 points)

4. Now, include both macro variables and determine if the model has a better fit and reliability than the simple regression model. Determine also all variables' statistical significance. (25 points)

5. Check for heteroscedasticity and serial correlation in the residuals and, if present, propose ways to correct them. Perform these corrections and discuss. (25 points)