Alpha Stock Has a Beta of 1

question 27

Multiple Choice

Alpha stock has a beta of 1.29.The risk-free rate of return is 3.2 percent,and the market rate of return is 10.7 percent.What is the Alpha stock risk premium?

• A)7.24%
• B)9.30%
• C)7.59%
• D)8.77%
• E)9.68%

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Definitions:

Game Theory

A theoretical framework for conceiving social situations among competing players and predicting their optimal decisions.

Strategic Situations

Scenarios where the outcomes depend on the actions of two or more decision-makers, each considering the others' likely responses.

Normative Economics

The part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics.

Cheating On Agreements

The act of knowingly violating the terms of an agreement or contract, often to gain an unfair advantage or benefit.