An Analyst Estimates the Index Model for a Stock Using

question 80

Multiple Choice

An analyst estimates the index model for a stock using regression analysis involving total returns. The estimated intercept in the regression equation is 6% and the β is 0.5. The risk-free rate of return is 12%. The true β of the stock is

• A) 0%.
• B) 3%.
• C) 6%.
• D) 9%.

---

Definitions:

Horizontal Axis

The x-axis in a graph or chart, typically used to represent the independent variable in data plotting.

Line Chart

A type of chart used in statistics that displays information as a series of data points connected by straight line segments, useful for visualizing trends over time.

Potato Prices

The cost associated with purchasing potatoes, affected by variables such as geographic region, season, and market demand.

Vertical Axis

In a graph, it is the y-axis, representing the range of values for a given variable, typically placed perpendicular to the horizontal axis.