Use the Information for the Question(s)below

question 119

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 California Gold Mining's expected return is 2%.Then California Gold Mining's alpha is closest to:

• A)-3%.
• B)-13%.
• C)7%.
• D)-11%.

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Definitions:

Reaction

A process in which substances interact to form one or more new substances with different molecular compositions and properties.

Organic Product

A compound or material derived from living organisms, typically characterized by carbon-based structures.

Major

Term often used to describe the predominant or most abundant component, product, or outcome in a process or mixture.

Structure

The arrangement of and relations between the parts or elements of something complex, such as a molecule's 3D arrangement of atoms in space.