Exhibit 5-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 22

Multiple Choice

Exhibit 5-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{lcccc}\text { Stock } & \mathrm{R}_{\text {it }} & \mathrm{R}_{\text {mt }} & \mathrm{a}_{\mathrm{i}} & \text { Beta } \\\hline \text { ABC } & 11.5 & 13.0 & 0 & 0.7 \\\text { XYZ } & 9.0 & 7.0 & 0 & 1.1\end{array}$
R_it = return for stock i during period t
R_mt = return for the aggregate market during period t
-Refer to Exhibit 5-2. What is the abnormal rate of return for Stock ABC when you consider its systematic risk measure (beta) ?

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

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Definitions:

Medicaid

A government-funded program in the United States that provides health coverage to eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities.

Medicare

A federal health insurance program in the United States primarily for people who are 65 or older, as well as for some younger people with disabilities.

Needs Meeting

The process or event where requirements or demands of individuals or groups are addressed and fulfilled.

Fragmentation

The process or state of breaking or being broken into small or separate parts, often leading to a lack of cohesion in areas such as policy or organization.