Question: Question 12 1 pts Wrote Analysts has just used the CAPM model to compute an re of 18.679% for the VaperWare company. It found re

Question 12 1 pts Wrote Analysts has just used the CAPM model to compute an re of 18.679% for the VaperWare company. It found re by, among other things, computing Beta from a regression between the historical stock returns of Vaperware and the SPY ETF. The R2 of this regression was 12%. What could possibly be problematic with WroteAnalysts' estimated re for the VaperWare company? B) and C) C) The R2 of the regression used to compute Beta is too small to make the regression (and Beta) meaningful. A) Nothing is wrong, based on the information given, but more info is needed fully answer this question. B) and D) O D) The CAPM model has been supersceded as a "best practice" model by the economic equivalent model. B), C), and D) O B) The future returns of SPY and/orVaperWare may not be well represented by historical returns. Question 12 1 pts Wrote Analysts has just used the CAPM model to compute an re of 18.679% for the VaperWare company. It found re by, among other things, computing Beta from a regression between the historical stock returns of Vaperware and the SPY ETF. The R2 of this regression was 12%. What could possibly be problematic with WroteAnalysts' estimated re for the VaperWare company? B) and C) C) The R2 of the regression used to compute Beta is too small to make the regression (and Beta) meaningful. A) Nothing is wrong, based on the information given, but more info is needed fully answer this question. B) and D) O D) The CAPM model has been supersceded as a "best practice" model by the economic equivalent model. B), C), and D) O B) The future returns of SPY and/orVaperWare may not be well represented by historical returns
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
