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:

Educational Attainment

The highest level of education an individual has completed, often used as a measure in demographic studies.

School Completed

The attainment of education up to a certain level, often resulting in the awarding of a certificate or degree.

Bachelor's Degree

An undergraduate academic degree awarded by colleges and universities upon completion of a course of study lasting three to seven years (depending on institution and academic discipline).

Non-Hispanic Whites

Individuals residing in the United States who identify as white and are not of Hispanic or Latino origin.