Security a Has an Expected Rate of Return of 0

question 39

Multiple Choice

Security A has an expected rate of return of 0.10 and a beta of 1.3.The market expected rate of return is 0.10 and the risk-free rate is 0.04.The alpha of the stock is

• A)1.7%.
• B)-1.8%.
• C)8.3%.
• D)5.5%.
• E)none of the above.

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Definitions:

Stereotype Threat

The risk of confirming negative stereotypes about an individual's racial, ethnic, gender, or cultural group, which can impair their performance in certain tasks.

Negative Attitude

A general disposition to evaluate people, objects, or situations unfavorably or with pessimism.

Social Identity Theory

A psychological theory that examines how a person's self-concept is based on their membership within social groups, influencing their behavior and attitudes.

Stereotype Threat Theory

The theory that people are likely to experience anxiety when they are at risk of confirming a negative stereotype about their social group, which can impair their performance.