Consider the Regression Equation

question 10

Multiple Choice

Consider the regression equation:
R_it- r_ft= _ai+ b_i(r_mt- r_ft) + e_it
Where:
R_it= return on stock i in month t
R_ft= the monthly risk-free rate of return in month t
R_mt= the return on the market portfolio proxy in month t
This regression equation is used to estimate

• A)the security characteristic line.
• B)benchmark error.
• C)the capital market line.
• D)all of the above.
• E)none of the above.

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