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:

Relative Luminance

The amount of light that is emitted or reflected by an object, relative to the brightness of a similarly illuminated white object.

Figure-Ground Relationships

A concept in visual perception where the viewer can distinguish objects (the figure) from their surrounding context (the ground).

John Locke

A 17th-century English philosopher and physician known as one of the most influential of Enlightenment thinkers, particularly regarding social contract theory and liberalism.

Immanuel Kant

A German philosopher known for his work in epistemology, ethics, and aesthetics, emphasizing the importance of reason and autonomy.