A Stock Has a Return of 16

question 84

Multiple Choice

A stock has a return of 16.18 percent and a beta of 1.47.The market return is 10.65 percent and the risk-free rate is 3.20 percent.What is the Jensen-Treynor alpha of this stock?

• A) −1.12 percent
• B) −0.17 percent
• C) 0.66 percent
• D) 1.38 percent
• E) 1.59 percent

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Definitions:

Subject Variable

A variable that represents characteristics or conditions that vary within the subjects of a study, such as age, gender, or test scores.

Formal Prediction

The process of making forecasts or predictions based on systematic, often quantitative, analysis rather than intuition or informal judgment.

Hypothesis

A suggested hypothesis developed from minimal evidence to initiate further exploration.

Testable Hypotheses

Hypotheses that can be empirically tested through experimentation or observation, allowing for the confirmation or refutation of the proposed predictions.