The following regression equation describes the daily returns of stock XYZ, r XYZ, in terms of an index return, r index, and a mean zero disturbance term, ? : r XYZ=α+β r index +? where α and β are...

The following regression equation describes the daily returns of stock XYZ,
^rXYZ, in terms of an index return,
^rindex, and a mean zero disturbance term, ? :

^rXYZ=α+β^rindex +?

where α and β are constants, ? is mean zero with a standard deviation of 1.0%, α is 0.01%, and β is 1.20. If the index return on a given day is 5%, what is the expected return of XYZ?