Consider the Single-Index Model

question 4

Multiple Choice

Consider the single-index model. The alpha of a stock is 0%. The return on the market index is 10%. The risk-free rate of return is 5%. The stock earns a return that exceeds the risk-free rate by 5%, and there are no firm-specific events affecting the stock performance. The β of the stock is

• A) 0.67.
• B) 0.75.
• C) 1.0.
• D) 1.33.
• E) 1.50.

---

Definitions:

Key Competencies

Essential abilities and skills that an individual needs in order to be successful in a job or task.

Managerial

Pertaining to the activities, responsibilities, and skills related to managing an organization or a part of it.

Leadership Roles

Positions within an organization tasked with guiding, directing, and influencing others towards achieving collective goals.

Directs

Commands or instructions given with authority to guide or control actions or decisions.