The Line Plotted to Fit Observations of a Stock's Returns

question 85

Multiple Choice

The line plotted to fit observations of a stock's returns versus the market's returns determines the:

• A)security market line.
• B)Beta of the stock.
• C)market risk premium.
• D)capital asset pricing model.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual values in a dataset deviate from the mean of the dataset.

Random Variable

A variable that can take on numerical results from a random event.

Normally Distributed

Refers to a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Heating Oil

A low-viscosity, liquid petroleum product used as a fuel oil for furnaces or boilers in buildings for heating purposes.