A Security Has an Expected Rate of Return of 0

question 120

Multiple Choice

A security has an expected rate of return of 0.15 and a beta of 1.25.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)-1.7%.
• C)8.3%.
• D)3.5%.
• E)none of the above.

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