BMO Nesbitt Burns Estimates the Index Model for a Stock

Multiple Choice

BMO Nesbitt Burns estimates the index model for a stock using regression analysis involving total returns.They estimated the intercept in the regression equation at 6% and the β at 0.5.The risk-free rate of return is 12%.The true α of the stock is ________.

A) 0%
B) 3%
C) 6%
D) 9%
E) none of these