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:

Product Line Expansion

Adding related products to an existing product line to cater to a broader market or capitalize on the brand's reputation.

Consumer Products

Goods produced for personal use by the general public, including a wide range of items from household goods to personal electronics.

Industry Factors

Various external elements such as technology, regulation, and competition that influence a company's performance in its sector.

Primary Packaging

The first layer of packaging directly in contact with the product, designed to protect and preserve, as well as provide consumer information.