In the single-index model represented by the equation r_i= E(r_i) + $\beta$_iF + e_i, the term e_i represents A)the impact of unanticipated macroeconomic events on security i's return. B)the impact of unanticipated firm-specific events on security i's return. C)the impact of anticipated macroeconomic events on security i's return. D)the impact of anticipated firm-specific events on security i's return.

Question

Quizplus · Accepted Answer

The term e_i represents the impact of unanticipated firm-specific events on security i's return, which cannot be explained by the overall market or firm-specific factors.

In the Single-Index Model Represented by the Equation Ri= E(ri) β\betaβ

In the Single-Index Model Represented by the Equation R_i= E(r_i) $\beta$