USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 15

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 5.2. What is the abnormal rate of return for Stock XYZ when you consider its systematic risk measure (beta) ?

• A) 2.0 percent
• B) -1.5 percent
• C) 2.4 percent
• D) 1.3 percent
• E) -3.2 percent

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Definitions:

Sales Returns and Allowances

Transactions in which customers return damaged or unsatisfactory products for refunds or credit, and adjustments made to sales revenue for these returns or granted concessions.

Accounts Receivable

Outstanding payments from customers to a firm for delivered or utilized goods or services awaiting settlement.

Merchandise Return

The process whereby customers return previously purchased merchandise to the seller for a refund, store credit, or exchange.

Selling Expenses

Costs incurred directly and indirectly in selling a product, such as commissions, advertising, and promotional materials.