USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 129

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 ABC when you consider its systematic risk measure (beta) ?

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

---

Definitions:

Perfect Substitutes

Goods that can be used in place of each other with no loss of utility to the consumer, often seen as identical in consumption.

Apples

Edible fruits from the apple tree, with a sweet taste and crisp texture, consumed worldwide and used in various cuisines for dishes such as pies, juices, and ciders.

Bananas

A curved, yellow fruit with soft, sweet flesh when ripe, often eaten as a snack or used in cooking.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the face value of interest payments.