Question: (a)Explain the pitfall of spurious regression in a bivariate setting where Et is the residual term. (b) How would you detect spurious regression? (c) Is

(a)Explain the pitfall of spurious regression in a bivariate setting (a)Explain the pitfall of spurious regression in a bivariate setting where Etwhere Et is the residual term.

(b) How would you detect spurious regression?

(c) Is spurious regression a serious concern when running CAPM regressions? Explain why.

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