A Security Has an Expected Rate of Return of 0

question 62

Multiple Choice

A security has an expected rate of return of 0.13 and a beta of 2.1. The market expected rate of return is 0.09, and the risk-free rate is 0.045. The alpha of the stock is

• A) −0.95%.
• B) −1.7%.
• C) 8.3%.
• D) 5.5%.

---

Definitions:

Treaty of Utrecht

A series of agreements signed in 1713 between various European states, ending the War of the Spanish Succession and marking the emergence of Britain as a dominant world power.

War of Spanish Succession

The War of Spanish Succession (1701-1714) was a major European conflict fought over who would inherit the Spanish throne, leading to significant shifts in power dynamics among European states.

Louis XIV

Known as the Sun King, he was a monarch of the House of Bourbon who reigned as King of France from 1643 until his death in 1715.