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If you use a linear model to identify an asset return and find that the historical ( observed ) return was much higher than the
If you use a linear model to identify an asset return and find that the historical observed return was much higher than the model estimate
Select all statements that a truecorrect Incorrectly selected statements will penalize your total score
a You should be skeptical of your linear model and perform various statistical tests to attempt to verify the finding
b You might forecast that the stock price would rise
c You might conclude that there is a mispricing
d You might conclude that the stock was underpriced
e You might concluded that the stock was overpriced
f You might forecast that the price would fall
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