Write the equation for the market model form of the CAPM. What is the intercept term in
Question:
Write the equation for the market model form of the CAPM. What is the intercept term in this model? Can the intercept be used to test the CAPM?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (QA)
Answered By
Branice Buyengo Ajevi
I have been teaching for the last 5 years which has strengthened my interaction with students of different level.
4.30+
1+ Reviews
10+ Question Solved
Related Book For
Investment Valuation And Asset Pricing Models And Methods
ISBN: 9783031167836
1st Edition
Authors: James W. Kolari, Seppo Pynnönen
Question Posted:
Students also viewed these Business questions
-
1. The famous capital asset pricing model or CAPM is a single factor model that characterizes the portion of an assets total return that results from systematic movements in the broader market. It is...
-
The Capital Asset Pricing Model (CAPM) describes the relationship between returns on a speculative asset (typically returns on stock) and returns on the whole stock market. The underlying theory...
-
The CAPM is one of the most thoroughly researched models in financial economics. When beta is estimated in practice, a variation of CAPM called the market model is often used. To derive the market...
-
Research an organization that has EITHER done a great job at identifying how they are socially responsible, or that has gotten into "hot water" for not being ethical in their advertising. If you...
-
1-Consider the threaten discussion of mini-cameras and security. How do you think these types of devices affect privacy? Do you think there will come a time where these types of cameras will be so...
-
Simplify e x e -2x .
-
Tektronix imports some components from a Japanese supplier. Jerry Davies now needs to hedge a purchase of components for \( 80,000,000\) from Teks Japanese supplier. Payment is due in six months. He...
-
Claims received by Healthwise Insurance Company are entered into the database at one station, and sent to another station for review. The processing time (in minutes) required for each general type...
-
The income of a partnership is taxed to partners if the partners receive the income as a distribution during the year. True false Because a partnership does not pay taxes, a partnership is not...
-
Why put a random error term in the market model? How would you estimate the market model with regression analysis?
-
Using data in the following table, compute the expected returns for different assets using the CAPM. E(R) Rf (%) 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Beta, Bi -0.25 0.00 0.25 0.75 1.00 1.50 2.00 E(RM)...
-
The velocity of a particle traveling in a straight line is given v = bt + ct 2 . If s = 0 when t = 0, determine the particles deceleration and position when t = t 1 . How far has the particle...
-
Follow-through is very important in many sports, such as in serving a tennis ball. Explain how follow-through can increase the speed of the tennis ball when it is served.
-
In a football game, does a fast-running running back always have more linear momentum than a slow-moving, more massive lineman? Explain.
-
Companies of all sizes need to develop a corporate strategy. You can imagine how complex such strategies get when the organization is a media and sport conglomerate like AEG. AEGis a subsidiary of...
-
Implement a class Rectangle which represents a rectangle shape as described below: A. The Rectangle class has one private class constant DEFAULT_VALUE that should be initialized to 0.0 . B. The...
-
Implement queue using dynamic memory allocation, such that the implementation should follow the following constraints. a. The user should use memory allocation from the heap using new operator. In...
-
Using the data in Problem 13.5, develop a multiple regression model to predict per capita personal consumption by the consumption of paper, fish, and gasoline. Discuss the output and pay particular...
-
Arlington Merchants reported the following on its income statement for the fiscal years ending December 31, 2016 and 2015. 2016 2015 Sales $4,857,500 $4,752,900 Cost of goods sold 3,258,950 3,207,000...
-
The stock of Nugents Nougats currently sells for $44 and has an annual standard deviation of 45 percent. The stock has a dividend yield of 2.5 percent and the risk-free rate is 4.1 percent. What is...
-
A stock is currently priced at $63 and has an annual standard deviation of 43 percent. The dividend yield of the stock is 2 percent and the risk-free rate is 4 percent. What is the value of a call...
-
What is the value of a call option if the underlying stock price is $73, the strike price is $75, the underlying stock volatility is 37 percent, and the risk-free rate is 5 percent? Assume the option...
-
Radko Inc. had the following transactions related to its common and preferred shares: Transactions January 15 Issued 230,000 no par common shares for $33 per share. Issued 1,700 $20 stated value...
-
Pronghorn Ltd. and Culver Ltd. incurred the following merchandise transactions in June. June 10 11 12 19 Pronghorn sold $5,400 of merchandise to Culver, terms n/30, FOB shipping point. The...
-
Hudson Partners provides management consulting services to government and corporate clients. Hudson has two support departments administrative services (AS) and information systems (IS)and two...
Study smarter with the SolutionInn App