The Equation for the Single-Index Market Model Is

question 9

Multiple Choice

The equation for the single-index market model is

• A) RFR_it = a_i + bR_mt + e_t
• B) R_it = a_i + bR_mt + e_t
• C) R_it = a_i + bRFR_t + e_t
• D) R_mt = a_i + bR_it + e_t
• E) R_it = a_i + b(R_mt - RFR_t) + e_t

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Definitions:

Utility Levels

A measure of the varying degrees of satisfaction or utility that consumers derive from different bundles of goods and services.

Preferences

The tastes, desires, or choices that consumers have regarding products, goods, or services.

Indifference Curves

Graphical representations used in economics to show different combinations of goods or services between which a consumer is indifferent.

Utility

Represents the satisfaction or benefit a consumer receives from consuming a product or service.