BMO Nesbitt Burns Estimates the Index Model for a Stock

question 2

Multiple Choice

BMO Nesbitt Burns estimates the index model for a stock using regression analysis involving total returns.They estimated the intercept in the regression equation at 6% and the β at 0.5.The risk-free rate of return is 12%.The true α of the stock is ________.

• A) 0%
• B) 3%
• C) 6%
• D) 9%
• E) none of these

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Definitions:

Cephalization

The evolutionary trend towards concentrating sensory and neural organs at the anterior end of an organism.

Nerve Nets

Simplest form of a nervous system found in invertebrates, consisting of a network of interconnected nerve fibers.

Connective Tissue

Tissue that supports, binds, or separates other tissues or organs, with various types including bone, cartilage, fat, blood, and lymph.

Neuron Fibers

Long, slender projections of nerve cells that transmit electrical impulses throughout the nervous system.