The Risk-Free Rate Is 3

question 10

Multiple Choice

The risk-free rate is 3.4 percent and the expected return on the market is 10.8 percent.Stock A has a beta of 1.18.For a given year,stock A returned 13.6 percent while the market returned 11.8 percent.The systematic portion of the unexpected return was ________ percent and the unsystematic portion was ________ percent.

• A) 1.045; 0.207
• B) 1.145; 0.126
• C) 1.180; 0.288
• D) 1.344; 1.443
• E) 1.500; 1.449

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Definitions:

Executive Privilege

A right claimed by the president of the United States and other members of the executive branch to resist certain subpoenas and other interventions by the legislative and judicial branches of government.

Supreme Court

The highest judicial body in a country or state, often having the final authority in interpreting the constitution and laws.

U.S. v. Nixon

A landmark Supreme Court case in 1974 that resulted in a unanimous decision against President Richard Nixon, compelling him to release tape recordings related to the Watergate scandal.

Executive Privilege

A right claimed by the president of the United States and other members of the executive branch to maintain confidential communications under certain circumstances, especially to shield sensitive information from legislative and judicial review.