Exhibit 92
Use the Information Below for the Following Problem(S)
Consider

question 57

Multiple Choice

Exhibit 9.2
Use the Information Below for the Following Problem(S)
Consider the three stocks, stock X, stock Y and stock Z, that have the following factor loadings (or factor betas) .
$$\begin{array} { c c c } \text { Stack } & \text { Factor 1 Londine } & \text { Factor } 2 \text { Londing } \\\hline X & - [ .55 & 1.2 \\Y & - [ .10 & 0.85 \\Z & 0.35 & 0.5\end{array}$$
The zero-beta return (??) = 3%, and the risk premia are ?? = 10%, ?? = 8%. Assume that all three stocks are currently priced at $50.
-Refer to Exhibit 9.2.Assume that you wish to create a portfolio with no net wealth invested and the portfolio that achieves this has 50% in stock X,-100% in stock Y,and 50% in stock Z.The net arbitrage profit is

• A) $8
• B) $5
• C) $7
• D) $12
• E) $15

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Definitions:

Money Income

The total amount of monetary earnings received by an individual or household, including wages, salaries, and other income sources.

Car Maintenance

The process of performing regular checks and necessary repairs on a vehicle to ensure it runs efficiently and safely.

Economic Income

The total value of all income earned, including both monetary sources and the monetary value of benefits such as stock options or health insurance.

Taxable Income

The portion of an individual's or entity's income used to determine how much tax is owed to the government in a given tax year.