Tests of the CAPM That Use Regression Techniques Are Subject

question 54

Multiple Choice

Tests of the CAPM that use regression techniques are subject to inaccuracies because

• A) the statistical results used are almost always incorrect.
• B) the slope coefficient of the regression equation is biased downward.
• C) the slope coefficient of the regression equation is biased upward.
• D) the intercept of the regression equation is biased downward.
• E) the intercept of the regression equation is equal to the risk-free rate.

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Definitions:

Job Order Costing

An accounting method used to track costs and evaluate the profitability of custom jobs by accumulating the costs associated with a specific customer order.

Home Construction

The process of building residential homes, including planning, design, construction, and sale of new homes.

Prime Costs

The combination of direct materials and direct labor costs.

Direct Labor

The cost of wages for employees who are directly involved in the production of goods or services.