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

question 17

Multiple Choice

Analysts may use regression analysis to estimate the index model for a stock.When doing so, the intercept 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:

Liquidated Debt

A debt with a specific, fixed amount that has been agreed upon by all parties involved.

Accord

An agreement in law where two parties agree to settle a dispute by one party fulfilling a condition offered by the other.

Satisfaction

The fulfillment or discharge of an obligation such as a debt or the performance of a contract, or a feeling of fulfillment from achieving one's desires or requirements.

Debt

Money owed by one party, the debtor, to another, the creditor, typically arising from a transaction of a loan or credit.