The Risk-Free Rate Is 4

question 58

Multiple Choice

The risk-free rate is 4.0% and the expected return on the market is 8%. Stock A has a beta of 1.35. For a given year, Stock A returned 12.0% while the market returned 8.80%. The systematic portion of Stock A's unexpected return was ________% and the unsystematic portion was ________%.

• A).80; 1.30
• B).90; 1.40
• C)1.08; 1.52
• D)1.40; .90
• E)4.62; 1.41

---

Definitions:

Scrutiny

The act of closely examining or inspecting something to ensure accuracy, authenticity, or conformance to standards.

Competition

The rivalry among businesses or individuals for customers, market share, or achievements.

Per Se Approach

A legal standard that deems certain actions to be inherently illegal without needing to prove harm or anticompetitive effects.

Fixed Price

An agreed upon price for goods or services that is not subject to change under normal circumstances.