USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 68

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

• A) 1.40 percent
• B) -1.40 percent
• C) 2.80 percent
• D) -2.80 percent
• E) 0 percent

---

Definitions:

Mustangs

Wild horses in the Western United States, descended from horses brought to the Americas by Spanish explorers.

Law of Demand

A fundamental economic principle stating that, all else being equal, as the price of a good increases, consumer demand for the good decreases, and vice versa.

Average Price

The mean price of a good or service, calculated by dividing the total revenue by the quantity sold.

Equilibrium Price

The cost at which the amount of a product consumers want to buy matches the amount producers are willing to sell, leading to equilibrium in the market.