USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 158

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
R_it = return for stock i during period t
R_mt = return for the aggregate market during period t
-Refer to Exhibit 5.1. What is the abnormal rate of return for Stock C during period t using only the aggregate market return (ignore differential systematic risk) ?

• A) 4.0 percent
• B) 1.2 percent
• C) -1.05 percent
• D) 2.0 percent
• E) -8.5 percent

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Definitions:

Simplify

The process of reducing an expression to its most basic form.

Evaluate

To determine the worth of a given expression.

Simplify

To reduce a mathematical expression to its simplest form.

Simplify

To alter a mathematical expression or equation to make it easier to understand or work with, often by reducing it to its simplest form.