Question: PottstownControl Systems, Inc. is a small high tech firm whose stock trades on the NASDAQ. You want to estimate the stock's beta based on the

PottstownControl Systems, Inc. is a small high tech firm whose stock trades on the NASDAQ. You want to estimate the stock's beta based on the empirical market line. That requires regressing the stock's returns against the contemporaneous returns on a market index. You will use the beta to estimate the stocks required return using the Capital Asset Pricing Model (CAPM). Which of the following would be your best choice for a market index in the regression?

A.Wiltshire5000 index, a total market index.

B.SP 500index of the 500largest firms traded on the NYSE.

C.NasdaqMarket Index because Pottstownis a small firm.

D.An industry index of high tech firms.

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