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:

Add

To combine one or more numbers or quantities to get a sum or total.

Inference Forms

Logical structures that guide the transition from premises to conclusions in reasoning.

MP

Member of Parliament, an individual elected to represent a geographic area in the parliament.

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Quantitative study of relative hereditary and environmental influences on behavior.