1)

In an index model, the return on a stock will be related to

a) both firm-specific events and macroeconomic events

b) firm-specific events only

c) macroeconomic events only

d) neither firm-specific events nor macroeconomic events

2)

Using total returns, as opposed to excess returns, to fit an index model for a stock through linear regression does not affect the beta estimate.

True

False

3)

Using total returns, as opposed to excess returns, to fit an index model for a stock through linear regression does not affect the alpha estimate.

True

False