Consider the Regression Equation: R_i - R_f = G₀

question 50

Multiple Choice

Consider the regression equation: r_i - r_f = g₀ + g₁b_i + e_it
Where:r_i - r_f = the average difference between the monthly return on stock i and the monthly risk-free rate
B_i = the beta of stock i
This regression equation is used to estimate __________.

• A)the benchmark error
• B)the security market line
• C)the capital market line
• D)A and B
• E)A,B,and C

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