We observe that Portfolio R has the lowest standard deviation of the residuals. Of course, we know
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We observe that Portfolio R has the lowest standard deviation of the residuals. Of course, we know from the econometric theory that the expected value of the residuals is zero. Would it be possible to have the standard deviation of those residuals equal to zero as well? Why?
Related Book For
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
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