Security a Has an Expected Rate of Return of 12

question 83

Multiple Choice

Security A has an expected rate of return of 12% and a beta of 1.10.The market expected rate of return is 8% and the risk-free rate is 5%.The alpha of the stock is _________.

• A) -1.7%
• B) 3.7%
• C) 5.5%
• D) 8.7%

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Definitions:

Monotony

A situation or series of experiences that are dull and repetitious due to lack of variety and interest.

Sentence Balance

The arrangement of words and phrases in a sentence to ensure equal and symmetrical grammatical structure, often for emphasis or rhythm.

Direct Strategy

A straightforward approach aimed at achieving an objective without any diversions or detours.

Frontloading

The strategy of placing the most important or critical information at the beginning of a text, message, or document to ensure that the key points are communicated early.