What Are the Assumptions Made by the Regression Model in Estimating

question 19

Essay

What are the assumptions made by the regression model in estimating the parameters and in significance testing?

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Definitions:

Abnormal Return

The difference between the actual return of a security and the expected return predicted by an equilibrium model.

Stock

A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

Fundamental Analysts

Experts who evaluate investments by analyzing the fundamental financial conditions and performance of businesses and markets.

Relative Strength Analysis

A technique used in technical analysis that compares the price movement of a security to another security or overall market.