Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A)The CAPM is an ex ante model, which means that all of the variables should be historical values that can reasonably be projected into the future.
• B)The beta coefficient used in the SML equation should reflect the expected volatility of a given stock's return versus the return on the market during some future period.
• C)The general equation: Y = a + bX + e, is the standard form of a simple linear regression where b = beta, and X equals the independent return on an individual security being compared to Y, the return on the market, which is the dependent variable.
• D)The rise-over-run method is not a legitimate method of estimating beta because it measures changes in an individual security's return regressed against time.

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