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:

Displacing

In psychology, a defense mechanism where an individual redirects emotional or behavioral responses from the intended object to another, less threatening one.

Forbidden Acts

These are actions or deeds that are prohibited by law, rules, or cultural norms, often associated with consequences if violated.

Oedipal Conflicts

A psychoanalytic term describing a child's feelings of desire for the opposite-sex parent and jealousy and envy toward the same-sex parent.

Electra Complex

A psychoanalytic concept involving a girl's psychosexual competition with her mother for possession of her father.