Analysis of Past Monthly Movements in Wal-Mart's Stock Price Has

question 8

Multiple Choice

Analysis of past monthly movements in Wal-Mart's stock price has produced the following estimates: α = -0.45% and β = 0.5.If the market index subsequently rises by 5% while Wal-Mart's stock price rises by 3%,what is the abnormal change in Wal-Mart's stock price?

• A)-0.45%
• B)+0.95%
• C)+0.05%
• D)+2.50%

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Definitions:

Utility Function

A mathematical representation of how consumers rank different bundles of goods based on the satisfaction or utility those goods provide.

Indifference Curve

A graphical representation of different bundles of goods between which a consumer is indifferent, showing the combinations of two goods that give the consumer the same level of satisfaction.

Horizontal Axis

In a graph or chart, the horizontal axis is typically used to represent the independent variable or the base measurement.

Vertical Axis

In a graph or chart, the vertical line or axis is typically used to represent the range of values for a dependent variable.