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:

Establishing Control Procedures

The process of implementing policies and procedures to ensure that an organization's objectives are achieved efficiently and effectively, reducing the risk of fraud or error.

Cash

Money in the form of physical currency, such as banknotes and coins, which can be used immediately for transactions.

Post Dated Cheques

Cheques written with a future date, not valid or actionable until that date, often used to ensure future payments.