A Security Has an Expected Rate of Return of 0

question 57

Multiple Choice

A security has an expected rate of return of 0.10 and a beta of 1.1. The market expected rate of return is 0.08, and the risk-free rate is 0.05. The alpha of the stock is

• A) 1.7%.
• B) -1.7%.
• C) 8.3%.
• D) 5.5%.

---

Definitions:

Libido

In psychoanalytic theory, it represents the energy of the sexual drive as a component of the life instinct.

Sexual Instinct

An intrinsic part of human behavior, driven by the biological and psychological urge to engage in sexual activities.

Pleasure Principle

A psychoanalytic concept suggesting that individuals seek immediate gratification of needs and desires to experience pleasure and avoid pain.

Collective Unconscious

A concept in Jungian psychology referring to part of the unconscious mind shared among beings of the same species, containing universal experiences and archetypes.