Security a Has an Expected Rate of Return of 0

question 13

Multiple Choice

Security A has an expected rate of return of 0.10 and a beta of 1.3. The market expected rate of return is 0.10, and the risk-free rate is 0.04. The alpha of the stock is

• A) 1.7%.
• B) −1.8%.
• C) 8.3%.
• D) 5.5%.

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Definitions:

Problem-solving Technique

A method or process employed to identify, analyze, and solve problems or challenges.

Innovative Solutions

Creative and effective answers to problems that employ novel approaches and thinking.

Doing Things Right

Refers to the emphasis on efficiency and accuracy in executing tasks, usually contrasting with doing the right things, which is more about strategic correctness.

Project Goals

Defined objectives and targets that a project aims to achieve within a set timeline.