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.

---

Definitions:

Commodity Items

Basic goods that are interchangeable with other goods of the same type and useful in commerce or trade.

Technology Newness

The degree to which technology is novel or untested, which can impact a project's risk profile and the need for specialized expertise.

DPCI Score

A metric or score, possibly specific to a certain context or organization, not recognized universally as a standardized metric.

Darnall-Preston Complexity Index

A framework used to assess the complexity of managing projects, focusing on organizational, external, and technological factors.