Use the Following Information to Answer the Question(s) Below

question 29

Multiple Choice

Use the following information to answer the question(s) below.

Assume that the CAPM is a good description of stock price returns. The market expected return is 8% with 12% volatility and the risk-free rate is 3%. New information arrives that does not change any of these numbers, but it does change the expected returns of the following stocks:



-The expected alpha for Taggart Transcontinental is closest to:

• A)-3.00%.
• B)-1.00%.
• C)1.00%.
• D)3.00%.

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Definitions:

Emile Durkheim

A French sociologist, one of the founding figures of sociology, known for his studies on social cohesion, religion, and theories on the social causes of suicide.

Lower-Income People

Lower-income people are individuals or groups that earn significantly less money compared to the average income levels within a society.

Deviant Acts

Actions that go against the norms or laws of a society, which can range from minor nonconformities to major offenses.

Ritualists

Individuals who strictly adhere to established rituals or ceremonies, often within a religious or cultural context.