A Security Has an Expected Rate of Return of 0

question 57

Multiple Choice

A security has an expected rate of return of 0.10 and a beta of 1.1. The market expected rate of return is 0.08, and the risk-free rate is 0.05. The alpha of the stock is

• A) 1.7%.
• B) -1.7%.
• C) 8.3%.
• D) 5.5%.

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Definitions:

Not-For-Profit Sectors

Segments of the economy that are organized and operated for purposes other than generating profit, focusing instead on social, cultural, or charitable missions.

Social Venture Capital

Investment funds allocated to startups and enterprises with the primary goal of generating social impact alongside financial returns.

Economic Development

The process by which the economic well-being and quality of life of a nation, region, or local community are improved through targeted initiatives.

Hybrid Models

Refers to systems or approaches that incorporate elements from two or more different models, methodologies, or technologies.