Your market model has a intercept of 4%, and you forecast a market return of 10%. If your security has a beta of 1.3 and has an actual return of 12%, the error term is
A) -8.3%.
B) -5%.
C) 3.2%.
D) 4.6%.

Question

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The Answer of Your market model has a intercept of 4%, and you forecast a market return of 10%. If your security has a beta of 1.3 and has an actual return of 12%, the error term is
A) -8.3%.
B) -5%.
C) 3.2%.
D) 4.6%.

Your Market Model Has a Intercept of 4%, and You