Analysts may use regression analysis to estimate the index model for a stock.When doing so, the slope of the regression line is an estimate of
A)the $\alpha$ of the asset.
B)the $\beta$ of the asset.
C)the $\sigma$ of the asset.
D)the $\delta$ of the asset.

Question

Quizplus · Accepted Answer

The slope of the regression line is an estimate of the beta (β) of the asset. Beta measures the sensitivity of the asset's returns to changes in the market returns, so it is an important measure used in the index model.

Analysts May Use Regression Analysis to Estimate the Index Model α\alphaα

Analysts May Use Regression Analysis to Estimate the Index Model $\alpha$