Exhibit 61
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 4

Multiple Choice

Exhibit 6.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $$\begin{array} { c c c c c } \text { Stock } & \mathbf { R } _ { \text {it } } & \mathbf { R } _ { \text {mt } } & \mathbf { a } _ { \mathbf { i } } & \text { Beta } \\\hline \mathrm { C } & 12 & 10 & 0 & 0.8 \\\mathrm { E } & 10 & 8.0 & 0 & 1.1\end{array}$$ R_it = return for stock i during period t
R_mt = return for the aggregate market during period t
-Refer to Exhibit 6.1. What is the abnormal rate of return for Stock E when you consider its systematic risk measure (beta) ?

• A)2.0%
• B)1.2%
• C)4.0%
• D)-1.05%
• E)-8.5%

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Definitions:

Cross-sectional Design

A research design that compares different groups of individuals at one single point in time to examine associations or differences among variables.

Different Ages

Refers to the various stages of life at which individuals experience different physical, cognitive, and emotional development milestones.

Longitudinal

A research design that involves repeated observations of the same variables over short or long periods of time.

Retests

The procedure of administering the same test multiple times to the same subjects at different points in time to measure changes or consistency.