USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 29

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 5.4. What is the abnormal rate of return for Stock B during period t using only the aggregate market return (ignore differential systematic risk) ?

• A) 0.40
• B) 1.40
• C) -1.10
• D) -4.40
• E) -6.40

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Definitions:

Closed-System Thinking

An approach that views organizations as systems that are relatively independent of environmental influences, focusing instead on internal dynamics and efficiency.

Contingency View

A management theory that suggests the optimal course of action depends on the specific internal and external circumstances faced by an organization.

General Systems Theory

An interdisciplinary theory about the nature of complex systems in nature, society, and science, emphasizing that systems can have commonalities.

Solar System

The collection of celestial bodies, including the sun, planets, moons, asteroids, comets, and meteoroids, that orbit around the sun due to its gravitational pull.