Security a Has an Expected Rate of Return of 12

question 45

Multiple Choice

Security A has an expected rate of return of 12% and a beta of 1.10. The market expected rate of return is 8% and the risk-free rate is 5%. The alpha of the share is ________.

• A)-1.7%
• B)3.7%
• C)5.5%
• D)8.7%

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Definitions:

Mantras

Sacred utterances, sounds, or phrases in Sanskrit believed to have spiritual or psychological power, often used in meditation.

Physiological Dependence

A condition arising from chronic use of a substance where the body becomes reliant on it for normal functioning, leading to physical withdrawal symptoms when the substance is not taken.

Nicotine

A potent stimulant and the addictive component found in tobacco products, affecting the nervous system.

Nembutal

A barbiturate drug used primarily as a sedative or for short-term treatment of insomnia.