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Consider the Regression Equation: Ri Rf = G0 + G1bi

Question 21

Multiple Choice

Consider the regression equation: ri rf = g0 + g1bi + eit
where:
Ri rf = the average difference between the monthly return on stock i and the monthly risk free rate
Bi = the beta of stock i
This regression equation is used to estimate


A) the benchmark error.
B) the security market line.
C) the capital market line.
D) the benchmark error and the security market line.
E) the benchmark error, the security market line, and the capital market line.

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