Question: Another analyst at your firm overhears this conversation and pulls you aside. He tells you of a tradeable index of illiquid foreign bonds very similar
Another analyst at your firm overhears this conversation and pulls you aside. He tells you of a tradeable index of illiquid foreign bonds very similar to the types of securities that the hedge fund manager is trading. What single-factor regression would you use to determine a more precise measure of any abnormal returns on the hedge fund? The monthly return for this new index is denoted rbond (Hint: write the specific equation).
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