Analysts May Use Regression Analysis to Estimate the Index Model $\alpha$

question 19

Multiple Choice

Analysts may use regression analysis to estimate the index model for a stock.When doing so, the slope of the regression line is an estimate of

• A)the \(\alpha\) of the asset.
• B)the \(\beta\) of the asset.
• C)the \(\sigma\) of the asset.
• D)the \(\delta\) of the asset.

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Definitions:

Balance Sheet

The balance sheet is a financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

is a financial statement that shows a company’s revenues, expenses, and profits over a specific period, providing insight into its profitability.

Debt-To-Equity Ratio

A ratio assessing the comparative contribution of debt and shareholder equity in the capital structure used for a company's assets.

Balance Sheet

A financial statement that presents a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and shareholders' equity.