A Security Has an Expected Rate of Return of 0

question 9

Multiple Choice

A security has an expected rate of return of 0.10 and a beta of 1.1.The market expected rate of return is 0.08 and the risk-free rate is 0.05.The alpha of the stock is

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