Use the Equation for the Question(s)below

question 47

Multiple Choice

Use the equation for the question(s) below.Consider the following linear regression model:
(Ri - rf) = ai + bi(RMkt - rf) + ei
-The ai in the regression:

• A)measures the sensitivity of the security to market risk.
• B)measures the deviation from the best-fitting line and is zero on average.
• C)measures the diversifiable risk in returns.
• D)measures the historical performance of the security relative to the expected return predicted by the SML.

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Definitions:

Empire Building

The practice of accumulating power and expanding influence within an organization, often for personal gains rather than for the benefit of the organization.

Apple-Polishing

Acting in a manner aimed at gaining favor or approval, typically through flattery or sycophancy.

Social IOUs

Informal obligations or debts of favor acquired through social interactions and networking, often leveraged for mutual benefit in personal or professional contexts.

Organizational Politics

The use of power and social networking within an organization to achieve changes that benefit the organization or individuals within it.