Use the Equation for the Question(s)below

question 104

Multiple Choice

Use the equation for the question(s) below.
Consider the following linear regression model:
(R_i - r_f) = a_i + b_i(R_Mkt - r_f) + e_i
-The a_i in the regression:

• A)measures the sensitivity of the security to market risk.
• B)measures the deviation from the best fitting line and is zero on average.
• C)measures the diversifiable risk in returns.
• D)measures the historical performance of the security relative to the expected return predicted by the SML.

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Definitions:

Personal Accountability

The willingness to take responsibility for one's own actions and their outcomes.

Loss of Individuality

The process through which individuals feel they are losing their unique identity and becoming indistinguishable from others.

Self-Awareness

The conscious knowledge of one's own character, feelings, motives, and desires.

Social Process

The pattern of growth and change in a society over time, involving the interaction between individuals and groups.