Use the Information for the Question(s)below

question 119

Multiple Choice

Use the information for the question(s) below.
Suppose that the risk-free rate is 5% and the market portfolio has an expected return of 13% with a volatility of 18%.Monsters Inc.has a 24% volatility and a correlation with the market of .60,while California Gold Mining has a 32% volatility and a correlation with the market of -.7.Assume the CAPM assumptions hold.
-Suppose that California Gold Mining's expected return is 2%.Then California Gold Mining's alpha is closest to:

• A)-3%.
• B)-13%.
• C)7%.
• D)-11%.

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Definitions:

United Nations Convention

A treaty or agreement under the auspices of the United Nations, establishing standards and norms for its member countries.

Unique Goods

Items that are distinct due to their design, quality, or rarity, often making them irreplaceable in transactions.

International Sale of Goods

Refers to the sale transaction of goods between parties situated in different countries, governed by international agreements like the CISG.

Letter-of-Credit Transaction

A financial transaction in which a bank guarantees the payment of a buyer's obligations to a seller, provided that the seller meets the specified terms of the sales agreement.