A. You estimate the index model, For A Inc. and B Pte: - = a +...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A. You estimate the index model, For A Inc. and B Pte: ₁-₁ = a₁ + Bi.M(M-₁) + e₁ For stocks A and B and find the following: St.Dev(r) 0.3 0.2 0.1 Stock A: Stock B: M: B₁.M- 1.5 2 1 The R² of the regression of A's excess returns on the market excess returns is higher than the R2 of the regression of excess returns for B on market excess returns. B. St.Dev(e) will be larger than St.Dev(eg). C. A. and B. are both true. D. A. and B. are both NOT true St.Dev(e) ? ? 0 A. You estimate the index model, For A Inc. and B Pte: ₁-₁ = a₁ + Bi.M(M-₁) + e₁ For stocks A and B and find the following: St.Dev(r) 0.3 0.2 0.1 Stock A: Stock B: M: B₁.M- 1.5 2 1 The R² of the regression of A's excess returns on the market excess returns is higher than the R2 of the regression of excess returns for B on market excess returns. B. St.Dev(e) will be larger than St.Dev(eg). C. A. and B. are both true. D. A. and B. are both NOT true St.Dev(e) ? ? 0
Expert Answer:
Answer rating: 100% (QA)
Lets solve this stepbystep For stock A AM 15 R2 AM2 152 ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
A pry bar is often used as a first class lever, where you apply your input force on one end of the lever, the output force is taken at the other end of the lever and the fulcrum (the pivot point) is...
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
A circular post, a rectangular post, and a post of cruciform cross section are each compressed by loads that produce a resultant force P acting at the edge of the cross section (see figure). The...
-
Green Day Hardware Company's payroll for November 2014 is summarized below. At this point in the year, some employees have already received wages in excess of those to which payroll taxes apply....
-
How long will it take for $10,000, invested at 5% per year, compounded continuously, to triple in value?
-
Match the term with its definition by placing the corresponding letter in the space provided: C Example: Amounts owed to a business by another business or individual 1. A contra-account, related to...
-
The Knowles/Armitage (KA) group at Merrill Lynch advises clients on how to create a diversified investment portfolio. One of the investment alternatives they make available to clients is the All...
-
TV prime s Luna's Electronics purchased TV's trom the manufacturer for $625 each less discounts of 20% and 10%. The regular markup on 40% of the regular selling price, and Luna's expenses are 15% of...
-
You are trying to evaluate whether an existing, idle distillation column can be used for a separation for which it was not originally designed. Answer the following questions about this column: a....
-
What are the major components of cash from financing activities? a. Raising or buying back capital or preferred securities. b. Raising or paying back debt. c. Distributions to equity holders...
-
Explain how the observational learning process occurs. Be sure to describe its application to both Instrumental Conditional and to Cognitive Theory of Learning. Briefly describe each of the criteria...
-
How can advanced risk management techniques be integrated into change management practices to anticipate potential obstacles and devise contingency plans to ensure a seamless transition ?
-
Identify the magnetic poles 1 and 2 of the current-carrying solenoid in the diagram below. + - 21
-
Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price Variable costs Fixed costs $ 446.00 per unit 206.00 per...
-
In the cookie Kit determine how many "materials' are needed to create the kit. Be sure to provide a detailed list. Consider how these materials are sourced and used. Discuss in your own words, the...
-
A cop's radar unit is parked 200m from a long straight stretch of a highway. Down the highway, 200m from the point on the highway closest to the officer, is an emergency phone. The cop points the...
-
When an electric field is applied to a shallow bath of vegetable oil, why do tiny bits of thread floating in the oil align with the field like compasses in a magnetic field?
-
Mark owns his home and has a $250,000 mortgage related to his purchase of the residence. When his daughter went to college in the fall of 2012, he borrowed $20,000 through a home equity loan on his...
-
Frank Willingham has the following transactions during the year: Sale of office equipment on March 15 that cost $20,000 when purchased on July 1, 2010. Frank has claimed $5,000 in depreciation and...
-
Calculate the amount of the child and dependent care credit allowed for 2012 in each of the following cases, assuming the taxpayers had no income other than the stated amounts. a. William and Carla...
-
a. Define an attribute of interest. b. What evidence should exist for attributes?
-
a. Indicate the types of statistical sampling techniques that may be used in auditing. b. Explain the essential differences between the techniques.
-
a. State the steps in a sampling plan for tests of controls. b. Identify the phases of an audit to which each step applies.
Study smarter with the SolutionInn App