Exhibit 5-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 28

Multiple Choice

Exhibit 5-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{ccccc}\text { Stock } & \mathrm{R}_{\text {it }} & \mathrm{R}_{\mathrm{mt}} & \mathrm{a}_{\mathrm{i}} & \text { Beta } \\\hline \text { C } & 12 & 10 & 0 & 0.8 \\\mathrm{E} & 10 & 8.0 & 0 & 1.1\end{array}$
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%
• B) 1.2%
• C) -1.05%
• D) 2.0%
• E) -8.50

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Definitions:

Misrepresentation

A false statement of fact made by one party to another, which has the effect of inducing that party into the contract.

Ratification

The adoption of a contract or act of another by a party who was not originally bound by the contract or act.

Breach

The violation or infringement of a law, agreement, or code of conduct.

Secret Commission

A payment made to an agent or a representative for facilitating a transaction or agreement, typically without the knowledge of some or all of the principal parties involved.