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Exhibit 6.3
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Rit = return for stock i during period t
Rmt = return for the aggregate market during period t
-Refer to Exhibit 6.3. What is the abnormal rate of return for Elliot during period t using only the aggregate market return (ignore differential systematic risk) ?
Random Variable
A variable whose outcomes depend on the results of a random phenomenon.
Normally Distributed
Refers to a data distribution that follows a bell-shaped curve, characterized by data clustering around a mean or central value.
Standard Deviation
A measure of the amount of variation or dispersion of a set of values; a low standard deviation indicates that the values tend to be close to the mean, while a high standard deviation indicates that the values are spread out over a wider range.
Uniformly Distributed
Describes a distribution in which all outcomes are equally likely, showing no preference for any interval of values within the range of the distribution.
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