The Excess Return Form of the Single-Index Market Model Is

question 30

Multiple Choice

The excess return form of the single-index market model is

• A) R_it =α + b(R_mt - R_it) + e_it
• B) RFR_t = α + b(R_mt - RFR_t) + e_it
• C) R_it - RFR_t = α + b(R_mt) + e_it
• D) R_it = α + b(R_mt - RFR_t) + e_it
• E) R_it - RFR_t = α + b(R_mt - RFR_t) + e_it

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Definitions:

Understatement

The act of presenting financial figures that are lower than the actual numbers, either intentionally or unintentionally.

LIFO Reserve

The difference in inventory valuation between the Last In, First Out (LIFO) method and another inventory accounting method, such as FIFO (First In, First Out).

FIFO Amounts

The value of inventory computed under the First-In, First-Out method, assuming the items purchased or manufactured first are sold first.

Pretax Income

Pretax income is a company's earnings before tax, calculated as revenue minus expenses, excluding tax expenses, serving as an indicator of financial performance.