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Consider the Regression Equation: Rit - Rft = Ai

Question 5

Multiple Choice

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) benchmark error.
C) the capital market line.
D) All of the options
E) None of the options

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