A Security Has an Expected Rate of Return of 0

question 87

Multiple Choice

A security has an expected rate of return of 0.13 and a beta of 2.1.The market expected rate of return is 0.09 and the risk-free rate is 0.045.The alpha of the stock is

• A)-0.95%.
• B)-1.7%.
• C)8.3%.
• D)5.5%.
• E)none of the above.

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Definitions:

Tuition Costs

The fees charged by educational institutions for instruction and other services related to the process of learning.

Productive Efficiency

A situation where a system or economy can no longer produce additional amounts of a good without lowering the production level of another product.

Allocative Efficiency

A state of the economy where the distribution of resources among different uses is optimal, maximizing total societal welfare.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, establishing market balance.