Exhibit 7-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $$\begin{array}{c}
\underline {\text { Rates of Return }}\
\begin{array} { c c c }
\text { Year } & \text { RA Computer } & \text { Market Index } \
\hline 1 & 13 & 17 \
2 & 9 & 15 \
3 & - 11 & 6 \
4 & 10 & 8 \
5 & 11 & 10 \
6 & 6 & 12
\end{array}
\end{array}$$
-Refer to Exhibit 7-1. Compute the intercept of the characteristic line for RA Computer.
A) -9.41
B) 11.63
C) 4.92
D) -4.92
E) -7.98

Question

Exhibit 7-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $$\begin{array}{c}
\underline {\text { Rates of Return }}\
\begin{array} { c c c } 
\text { Year } & \text { RA Computer } & \text { Market Index } \
\hline 1 & 13 & 17 \
2 & 9 & 15 \
3 & - 11 & 6 \
4 & 10 & 8 \
5 & 11 & 10 \
6 & 6 & 12
\end{array}
\end{array}$$
-Refer to Exhibit 7-1. Compute the intercept of the characteristic line for RA Computer.
A) -9.41
B) 11.63
C) 4.92
D) -4.92
E) -7.98

Quizplus · Accepted Answer

The intercept of the characteristic line is the expected return on the stock when the market return is zero. In this case, the intercept is -9.41%.

Exhibit 7-1 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Exhibit 7-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)