Consider the regression equation:
Rit- rft = ai + bi(rmt - rft) + eit
Where:
Rit = return on stock i in month t
Rft= the monthly risk-free rate of return in month t
Rmt= the return on the market portfolio proxy in month t.
This regression equation is used to estimate
A) the security characteristic line
B) the security market line
C) the capital market line
D) all of these
E) none of these
Correct Answer:
Verified
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Ri- rf = g0
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Ri - rf =
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Ri- rf = g0
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A)
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