One way that Black, Jensen and Scholes overcame the problem of measurement error was to
A)group securities into portfolios.
B)use a two-stage regression methodology.
C)reduce the precision of beta estimates.
D)set alpha equal to one.
E)None of the options

Question

Quizplus · Accepted Answer

Black, Jensen and Scholes, in their landmark study, found that grouping securities into well-diversified portfolios significantly reduced measurement error.

One Way That Black, Jensen and Scholes Overcame the Problem