this question

1. The capital asset pricing model (CAPM) of modern investment theory postulates the following relationship between the average rate of return of a security(common stock),measured over a certain period, and the volatility of the security, called the beta coefficient (volatility is measure of risk): =average rate of return of security i B. =true beta coefficient of security i u, "stochastic disturbance term The true Bi is not directly observable but is measured as follows: where r, rate of return of security i for time t I'm =market rate of return for time t e, =residual term and where B- is an estimate of the "true" beta coefficient. In practice, therefore, instead of estimating Eq. (1), one estimates where are obtained from the regression (2). But since are estimated, the rela- tionship between true B and B- can be written as where v, can be called the error of measurement. a. What will be the effect of this error of measurement on the estimate of a,? b. Will the a, estimated from Eq. (3) provide an unbiased estimate of true a,? If not, is it a consistent estimate of a.? If not, what remedial measures do you suggest