A Linear Regression to Estimate the Relation Between General Motors

question 81

Multiple Choice

A linear regression to estimate the relation between General Motors' stock returns and the market's return gives the best-fitting line that represents the relation between the stock and the market. The slope of this line is our estimate of ________.

• A) alpha
• B) beta
• C) risk-free rate
• D) volatility

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Definitions:

Percentage of Net Assets

This refers to a metric that calculates what portion of a company’s total net assets is represented by a particular investment or asset class.

Retained Earnings Account

An equity account that represents the accumulated portion of net income left over after dividends are paid to shareholders.

Cumulative Earnings

The total net income of a company since its inception, minus any dividends paid to shareholders.

Dividends

Distributions to shareholders from a company, typically originating from the profits earned by the corporation.