The excess return form of the single-index market model is A) R_it =α + b(R_mt - R_it) + e_it B) RFR_t = α + b(R_mt - RFR_t) + e_it C) R_it - RFR_t= α + b(R_mt) + e_it D) R_it= α + b(R_mt - RFR_t) + e_it E) R_it - RFR_t = α + b(R_mt - RFR_t) + e_it

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The excess return form of the single-index market model is R_it - RFR_t = α + b(R_mt - RFR_t) + e_it. This model is used to estimate the relationship between the excess return on an asset and the excess return on the market portfolio. The excess return on an asset is the return on the asset minus the risk-free rate, and the excess return on the market portfolio is the return on the market portfolio minus the risk-free rate. The alpha coefficient measures the excess return on the asset that is not explained by the market portfolio, and the beta coefficient measures the sensitivity of the asset's excess return to the excess return on the market portfolio.

The Excess Return Form of the Single-Index Market Model Is