When a Series Is Stationary, Weakly Dependent, and Has Serial

question 18

Multiple Choice

When a series is stationary, weakly dependent, and has serial correlation:

• A)the adjusted R² is inconsistent, while R² is a consistent estimator of the population parameter.
• B)the adjusted R² is consistent, while R² is an inconsistent estimator of the population parameter.
• C)both the adjusted R² and R² are inconsistent estimators of the population parameter.
• D)both the adjusted R² and R² are consistent estimators of the population parameter.

Identify and explain the role of beta in assessing the risk of individual stocks and portfolios.

Explain the impact of changes in expected inflation and the market risk premium on required returns.

Apply the principles of portfolio diversification and understand its effect on risk reduction.

Understand the concept of the Security Market Line (SML) and its implications for required returns based on beta.