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.

---

Definitions:

Joint Cost

The costs incurred in the process of producing two or more products simultaneously, where such costs cannot be separately identified with individual products.

By-Products

Secondary products that are generated alongside the main product during the manufacturing process.

Net Realisable Value

The estimated selling price of goods minus the costs of their completion and sale.

Physical Units Method

A costing method used to allocate costs in processes where goods are indistinguishable and it counts units as they are produced.