A Security Has an Expected Rate of Return of 0

question 62

Multiple Choice

A security has an expected rate of return of 0.13 and a beta of 2.1. The market expected rate of return is 0.09, and the risk-free rate is 0.045. The alpha of the stock is

• A) −0.95%.
• B) −1.7%.
• C) 8.3%.
• D) 5.5%.

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Definitions:

Colonial Merchants

Traders and business people operating in the colonial period, often involved in the exchange of goods between the colonies and the mother country.

Sons of Liberty

A group of American patriots during the colonial period who used demonstrations and other methods to protest against British taxation.

Intercolonial Association

An organization or alliance formed between different colonial territories, often for mutual support in matters of trade, defense, or governance.

Crowd Action

Collective behavior of a group of individuals, usually gathered in public, to express a common objective or protest against an issue or policy.