What Is an Example in Which a One-Sample Z Test

question 73

Essay

What is an example in which a one-sample Z test would be appropriate?

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Definitions:

CAPM

Capital Asset Pricing Model, a formula used to determine the expected return on an investment based on its risk relative to the overall market.

True Market Portfolio

A theoretical bundle of all possible investments that are weighted by market value.

Stock's Alpha

Stock's Alpha measures a stock's performance relative to a benchmark index, indicating its value added or lost against the market average.

Abnormal Return

The difference between the actual return of a security and the expected return, typically due to unexpected events.