Security a Has an Expected Rate of Return of 0

question 13

Multiple Choice

Security A has an expected rate of return of 0.10 and a beta of 1.3. The market expected rate of return is 0.10, and the risk-free rate is 0.04. The alpha of the stock is

• A) 1.7%.
• B) −1.8%.
• C) 8.3%.
• D) 5.5%.

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Definitions:

Impression Management

The process of consciously making efforts to control and shape the perceptions others hold about an individual or organization.

Ingratiating Manner

A behavior or approach designed to win approval or favor from others through flattery or charm.

Business Executives

Individuals who hold senior positions within a company, responsible for strategic decision-making and overall organizational leadership.

Harvard Business Review

A management magazine that is a product of Harvard Business Publishing that provides insights and research on management practices and trends.