Consider the Regression Equation: R_it − R_ft = A_i

Multiple Choice

Consider the regression equation: r_it − r_ft = a_i + b_i(r_mt − r_ft) + e_it
Where:
R_it = return on stock i in month t
R_ft = the monthly risk-free rate of return in month t
R_mt = the return on the market portfolio proxy in month t
This regression equation is used to estimate

A) the security characteristic line.
B) benchmark error.
C) the capital market line.
D) All of the options are correct.
E) None of the options are correct.