Use the Information for the Question(s)below

question 82

Multiple Choice

Use the information for the question(s) below.
Suppose that the risk-free rate is 5% and the market portfolio has an expected return of 13% with a volatility of 18%.Monsters Inc.has a 24% volatility and a correlation with the market of .60,while California Gold Mining has a 32% volatility and a correlation with the market of -.7.Assume the CAPM assumptions hold.
-Suppose that Monsters' expected return is 12%.Then Monsters' alpha is closest to:

• A)-2.0%.
• B)-1.0%.
• C)1.0%.
• D)0.5%.

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Definitions:

Forecast Values

Predicted amounts or outcomes estimated for future periods based on historical data and analysis models.

Gaming Console Sales

The total revenue or number of units sold from video game consoles, a key indicator of the gaming industry's performance and consumer preferences.

Mean Square Error

It measures the average of the squares of the errors that is, the average squared difference between the estimated values and the actual value.

Sales Details

Specific information related to the quantity, price, and conditions of the sales transactions.