In Case of a Simple CAPM Being Used to Estimate

question 30

Multiple Choice

In case of a simple CAPM being used to estimate a time series data:

• A) the mean of a residual risk should be equal to zero.
• B) the regression coefficient should be equal to zero.
• C) the difference between the market return and the riskfree rate of return should be equal to zero.
• D) the beta of the portfolio should be equal to zero.

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Definitions:

Quantifier Negation

The process of negating the quantifiers in a statement, such as changing "all" to "not all" or "some" to "none".

Existential Generalization

A logical operation that infers the existence of at least one member of a domain that satisfies a certain property from a specific case.

Existential Instantiation

A logical principle that derives the existence of a particular instance of a predicate within a domain of discourse from a general statement.

Universal Instantiation

A logical rule stating that if something is true for everything in a certain set, then it is true for any specific thing in that set.