Analysts May Use Regression Analysis to Estimate the Index Model

question 27

Multiple Choice

Analysts may use regression analysis to estimate the index model for a stock. When doing so, the slope of the regression line is an estimate of

• A) the α of the asset.
• B) the β of the asset.
• C) the σ of the asset.
• D) the δ of the asset.

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Definitions:

Average Collection Period

The average collection period is the average number of days it takes for a business to receive payments owed by its customers for sales made on credit.

Accounts Receivable

Funds that are owed to a company by its customers for products or services provided on credit.

Note Receivable

A written promise that one party will receive a certain amount of money from another party at a future date, categorized as an asset.

Honoured

In financial terms, referred to a cheque or payment that has been accepted and processed by the bank.