Consider the Single-Index Model

question 55

Multiple Choice

Consider the single-index model. The alpha of a stock is 0%. The return on the market index is 10%. The risk-free rate of return is 3%. The stock earns a return that exceeds the risk-free rate by 11%, and there are no firm-specific events affecting the stock performance. The β of the stock is

• A) 1.57.
• B) 0.75.
• C) 1.17.
• D) 1.33.
• E) 1.50.

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Definitions:

Emotional Intelligence

The ability to understand and manage one's own emotions and to recognize and influence the emotions of others.

Cross-Cultural Effectiveness

The ability to successfully interact, work, or perform tasks in a multicultural environment by understanding and adapting to diverse cultures.

Direct Communication

A straightforward and clear way of expressing ideas or giving instructions, avoiding ambiguity or indirectness.

Negotiators

Individuals or parties involved in discussions aimed at reaching an agreement or resolving a dispute.