A Security Has an Expected Rate of Return of 0

question 57

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%.

Learn about the common patterns and processes that occur within ecological communities.

Understand what constitutes an ecosystem and its components, including both biotic and abiotic elements.

Understand the concept and examples of infant reflexes.

Grasp the dynamic process of motor development and its linkage with sensory information.

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Definitions:

Expected Monetary Value

A statistical technique used in decision-making to calculate the average outcome when the future includes scenarios that may or may not happen.

Expected Payoff

Expected Payoff is a term often used in economics and finance to describe the average outcome of a set of uncertain events, considering each possible outcome and its probability.

Perfect Information

A situation in which all participants have access to all the information needed to make an informed decision.

State Of Nature

A term in decision theory and statistics referring to the actual outcome or underlying reality that affects decision-making or outcomes.