Analysis of Past Monthly Movements in IBM's Stock Price Produces

question 44

Multiple Choice

Analysis of past monthly movements in IBM's stock price produces the following estimates: α = 2. 5% and β = 1. 6. If the market index subsequently rises by 12% in one month and IBM's stock price increases by 20%, what is the abnormal change in IBM's stock price?

• A) +1.7%
• B) +8%
• C) -1.7%
• D) None of the above