Question: QUESTION 2 Consider the following linear regression model (Ri-r ab(RMkt)+ei The ei in the regression measures the non-diversifiable risk in returns. measures the deviation from

QUESTION 2 Consider the following linear regression model (Ri-r ab(RMkt)+ei The

QUESTION 2 Consider the following linear regression model (Ri-r ab(RMkt)+ei The ei in the regression measures the non-diversifiable risk in returns. measures the deviation from the best fitting line and is zero on average. measures the sensitivity of the security to market risk. measures the historical performance of the security relative to the expected return predicted by the SML

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