Under the Market Model,the Regression Line That Results When the Return

question 26

Multiple Choice

Under the Market Model,the regression line that results when the return of a security is plotted against the market index return is the:

• A)SML.
• B)CML.
• C)characteristic line.
• D)slope.

---

Definitions:

Deferred Tax Liability

A tax obligation that arises when taxable income and accounting income differ, to be paid in future periods when those differences reverse.

Effective Income Tax Rate

The average rate at which an individual's or corporation's pre-tax income is taxed, calculated by dividing the total tax expense by the taxable income.

Deferred Tax Liability

A tax obligation that a company owes but does not have to pay until a future date, often due to temporary differences between accounting and tax rules.