A Security Has an Expected Rate of Return of 0

question 62

Multiple Choice

A security has an expected rate of return of 0.13 and a beta of 2.1. The market expected rate of return is 0.09, and the risk-free rate is 0.045. The alpha of the stock is

• A) −0.95%.
• B) −1.7%.
• C) 8.3%.
• D) 5.5%.

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Definitions:

Influencing Factors

Various elements or conditions that can affect the outcome or performance of a process or system.

Implicit Personality Theory

The assumptions individuals unconsciously make about how personality traits are connected and how they influence behavior.

Physical Characteristics

The observable attributes or features of an object, person, or place.

Perceptual Selection

The process by which individuals filter, select, and interpret sensory information to create a meaningful picture of the world.