Consider the Single-Index Model

question 4

Multiple Choice

Consider the single-index model. The alpha of a stock is 0%. The return on the market index is 10%. The risk-free rate of return is 5%. The stock earns a return that exceeds the risk-free rate by 5%, and there are no firm-specific events affecting the stock performance. The β of the stock is

• A) 0.67.
• B) 0.75.
• C) 1.0.
• D) 1.33.
• E) 1.50.

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Definitions:

Sociological Perspective

A view of society based on the dynamic relationships between individuals and the larger social network in which we all live.

Social Inequality

Disparities in opportunities and rewards are present across different social standings or roles within a society or group.

Social Stratification

The arrangement of individuals and groups in a hierarchical system within society, often based on factors like wealth, power, and social status.

Hierarchical Social Classes

A system of social stratification where individuals are grouped in a ranked order from the highest to the lowest in terms of factors like wealth, status, and power.