Understanding Regression Coefficient Interpretation

Easy Multiple Regression Analysis Regression Coefficients

A financial analyst is reviewing a multiple regression analysis where the dependent variable is the annual return of a stock, and the independent variables include market return, interest rates, and firm size. The regression output shows the following coefficients for the independent variables:

Market Return Coefficient: 0.75
Interest Rate Coefficient: -0.10
Firm Size Coefficient: 0.50

If the analyst wants to interpret the Market Return Coefficient, how should it be understood in the context of the regression analysis?

A 1% increase in market return is associated with a 0.75% increase in the stock's annual return.

A 1% increase in market return is associated with a 0.10% decrease in the stock's annual return.

The market return does not influence the stock's annual return.

Hint

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