Question: Using total returns, as opposed to excess returns, to fit an index model for a stock through linear regression does not affect the beta estimate.

Using total returns, as opposed to excess returns, to fit an index model for a stock through linear regression does not affect the beta estimate.

True or false and why?

Using total returns, as opposed to excess returns, to fit an index model for a stock through linear regression does not affect the alpha estimate.

True of False and why?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

Question 15 1 pts Using total returns, as opposed to excess returns, to fit an index model for a stock through linear regression does not affect the beta estimate. O True O False > Question 16 1 pts...

Q:

Q2. Estimating Beta for Bayer AG Bayer AG is a chemicals conglomerate focused on crop science and health care. The company's stock trades on the Xetra Brse Frankfurt in Germany. Suppose you are an...

Q:

It is May 1, 2020. The latest stock price for Red Rock Mining Company (RRM.TO) is $14.01. Issued capital is equal to the number of shares outstanding for Red Rock Mining Company in the month as...

Q:

QUESTION: Simply Cayenne Company: A Comprehensive Case In Measuring A Firm's Cost Of Capital (Boudreaux, D., S. Rao, and P. Das, 2014) THE CASE Patricia Hotard, the Chief Executive Officer of Simply...

Q:

QUESTION 9 Which of the following statements about correlation is NOT accurate? If the correlation coefficient is 0, a zero-variance portfolio can be constructed. O Diversification reduces risk when...

Q:

1) In an index model, the return on a stock will be related to a) both firm-specific events and macroeconomic events b) firm-specific events only c) macroeconomic events only d) neither firm-specific...

Q:

I need your help with this: Can you please quote from the attached chapters / resource if possible? Corporations often use different costs of capital for different operating divisions. Using an...

Q:

Need help with finance investment homework. Deadline is in 15 hours. Thank you. 1 Investments - Finance 460AB Homework #4, Due Friday February 10, 2017 at 6 PM For all assignments: Please place your...

Q:

This question concerns lexical grammars. (a) Tree Adjoining Grammars contain two types of elementary tree. (i) What are these trees called? [1 mark] (ii) If one were building a grammar for English...

Q:

Hi again, I was hoping you can help with this investment management assignment. I am attaching the word document. It is 4 problems about asset management. Thank you for your help! Fin 6310 1. Assume...

Q:

Given f(x) is a polynomial function with leading term of -24x^(11), a. How many zeros will f(x) have? b. How many x-intercept s can f(x) have? c. How many turning points will f(x) have?

Q:

Steam enters an adiabatic turbine at 10 MPa and 500C and leaves at 10 kPa with a quality of 90 percent. Neglecting the changes in kinetic and potential energies, determine the mass flow rate required...

Q:

given a put option with expiry of a year with the current price of 1 0 0 and strike 9 5 . if the risk free rate is 1 0 % and vol is 3 0 % what is going to be the option price if it pays dividend of 4...

Q:

Graff, Incorporated, has sales of $41,680, costs of $13,560, depreciation expense of $2,910, and interest expense of $2,120. The tax rate is 24 percent. What is the operating cash flow, or OCF? Note:...