Use the Equation for the Question(s)below

question 49

Multiple Choice

Use the equation for the question(s) below.
Consider the following regression model:
R_s - r_f = a_s + (R_F1 - r_f) + (R_F2 - r_f) + e
-The term a_s is a(n) :

• A)error term that has an expectation of zero and is uncorrelated with either factor.
• B)measure of the expected percent change in the excess return of a security for a 1% change in the excess return of the first factor portfolio.
• C)measure of the expected percent change in the excess return of a security for a 1% change in the excess return of the second factor portfolio.
• D)constant term.

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Definitions:

Labour-Intensive

Describes industries or processes that require a large amount of manual labor input compared to capital investment.

Learning Rate

The speed at which a person or an organization improves performance or acquires knowledge over time, often resulting in reduced costs or increased proficiency.

Learning Curves

A graphical representation that shows the improvement in an individual's or organization's performance or efficiency over time due to learning and experience.

Learning Rate

The speed at which learning is acquired, often used in the context of the decreasing cost of production as experience increases.