Give the following true population SIM (not estimated SIM): Ri-Rf=0.1%+1.2(Rb-Rf)+ϵi When estimating this true SIM, what will be the estimated value of alpha (the intercept), when the variance of ϵi is small? Theriskless rate is 0% and the market risk premium is 0.5%. Your answer should be in percentage points. Select one: a.0 b. near 0.1% but not exactly 0.1% c. 0.5% d. 0.1% e. near 0.5% but not exactly 0.5%

Give the following true population SIM (not estimated SIM): Ri-Rf=0.1%+1.2(Rb-Rf)+ϵi When estimating this true SIM, what will be the estimated value of alpha (the intercept), when the variance of ϵi is small? Theriskless rate is 0% and the market risk premium is 0.5%. Your answer should be in percentage points. Select one: a.0 b. near 0.1% but not exactly 0.1% c. 0.5% d. 0.1% e. near 0.5% but not exactly 0.5%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 2P: APT An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free...

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