The following plot shows the estimated single-index model (blue line) from a sample of data points...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following plot shows the estimated single-index model (blue line) from a sample of data points (black dots) of the excess returns on a stock and the market portfolio: -15% -10% Stock Excess Return 15% 70 10% 5% 0% -5% -10% -15% 5% 15% Market Excess Return 10% Which of the following is a correct inference from this plot? The slope of the blue line is the market risk premium The X-intercept of the blue line is the alpha of the stock The stock is moving against the market O The correlation between the stock and the market excess returns is greater than 0 but less than 1 The following plot shows the estimated single-index model (blue line) from a sample of data points (black dots) of the excess returns on a stock and the market portfolio: -15% -10% Stock Excess Return 15% 70 10% 5% 0% -5% -10% -15% 5% 15% Market Excess Return 10% Which of the following is a correct inference from this plot? The slope of the blue line is the market risk premium The X-intercept of the blue line is the alpha of the stock The stock is moving against the market O The correlation between the stock and the market excess returns is greater than 0 but less than 1
Expert Answer:
Answer rating: 100% (QA)
The detailed answer for the above question is provided below The slope of ... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-1305635937
Concise 9th Edition
Authors: Eugene F. Brigham
Posted Date:
Students also viewed these finance questions
-
This dataset tracks the monthly performance of stock in Apple Computer since January 1990 through the end of 2011. The data include 264 monthly returns on Apple Computer, as well as returns on the...
-
A spring is at rest in the vertical direction. When a 5 kg mass is placed upon the spring, the length of the spring compresses to 0 . 2 0 meters. The 5 kg mass is removed and replaced by an 8 kg...
-
Alcor Inc. is a small producer of high-quality ice cream. During production, the raw milk materials are added at the beginning of production while the flavouring materials are added when the ice...
-
Firms sometimes use the threat of a bankruptcy filing to force creditors to renegotiate terms. Critics argue that in such cases the firm is using bankruptcy laws as a sword rather than a shield. Is...
-
For each of the following situations, calculate the \(z\)-statistic \((z)\), make a decision about the null hypothesis (reject, do not reject), and indicate the level of significance \((p>.05, p
-
How would you handle the issue if you were in Ricardo's position? Develop an action plan to get your point of view across. What would you say? What do you expect the objections or push-back will be?...
-
David Ltd sold the following machine in 2017: Cost Purchase date Useful life Residual value Selling date $150,000 1 July 2014 5 years $10,000 1 July 2017 $74,000 Sales proceeds Required: 1. Prepare...
-
Create a program that will scrape the sayings from: https://quotes.toscrape.com/page/2/ Set up your program to allow the user to input a page number (1-10) which will return the quotes from that...
-
Now calculate the cost of goods sold. West Nautical Company Calculation of Cost of Goods Sold For Current Year Beginning finished goods inventory Plus: Cost of goods manufactured Cost of goods...
-
Two-dimensional demand and supply curves are drawn under which of the following assumptions? A. Own price is held constant. B. All variables but quantity are held constant. C. All variables but own...
-
A market structure with relatively few sellers of a homogeneous or standardized product is best described as: A. oligopoly. B. monopoly. C. perfect competition.
-
Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly. a. Changes in the current one-year real interest rate are likely to have a...
-
What does the term return on investment mean?
-
The observation "As a price of a good falls, buyers buy more of it" is best known as: A. consumer surplus. B. the law of demand. C. the market mechanism.
-
Congratulations! You have been hired as a Cost Accountant by Sundial, Inc., which produces sunglasses. Your duties include developing cost standards for materials and labor, designing and...
-
When is the indirect pattern appropriate, and what are the benefits of using it?
-
You want to buy a house that costs $140,000. You have $14,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $126,000. However, the realtor...
-
You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters (where all of the firms records are kept) has been destroyed by fire. So, your first job...
-
You are considering an investment in Just us Corporations stock, which is expected to pay a dividend of $2.25 a share at the end of the year D 1 = $2 25 and has a beta of 0.9. The risk-free rate is...
-
Example 17.5 showed that a thin film whose thickness is one quarter of the wavelength of light in the film serves as an antireflection coating when coated on glass. In Example 17.5, \(n_{\text {film...
-
Give a specific example of a process that has the energy changes and transfers described. (For example, if the question states " \(\Delta E_{\mathrm{th}}>0, W=0\)," you are to describe a process that...
-
Give a specific example of a process that has the energy changes and transfers described. (For example, if the question states " \(\Delta E_{\mathrm{th}}>0, W=0\)," you are to describe a process that...
Study smarter with the SolutionInn App