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%.

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Definitions:

Primary Appraisal

The initial evaluation process in which an individual assesses the significance of a stressor as a threat, challenge, or harm/loss.

Lazarus's Theory

A concept in psychology that emphasizes the role of cognitive appraisal in emotions, suggesting that emotions are a result of an individual's evaluation of a situation.

Problem-focused Coping

A strategy for managing stress by directly tackling the problem that is causing emotional distress.

Emotion-focused Coping

A strategy aimed at managing the emotional response to a stressful situation rather than confronting the root of the problem directly.