Exhibit 5-4
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 23

Multiple Choice

Exhibit 5-4
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{ccccc}\text { Stock } & \mathrm{R}_{\text {it }} & \mathrm{R}_{\text {mt }} & \mathrm{a}_{\mathrm{i}} & \text { Beta } \\\hline \mathrm{A} & 10.3 & 12 & 0 & 0.6 \\\text { B } & 9.4 & 9.0 & 0 & 1.2\end{array}$
R_it = return for stock i during period t
R_mt = return for the aggregate market during period t
-Refer to Exhibit 5-4. 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

---

Definitions:

Federal Trade Commission

A U.S. federal agency responsible for protecting consumers and promoting competition by preventing anticompetitive, deceptive, and unfair business practices.

Private Company

A business owned by private individuals or corporations with restrictions on the transfer of shares and not publicly traded.

Privacy And Data Practices

Policies and procedures that govern the collection, use, and protection of personal information.

First Amendment

A provision in the United States Constitution that prohibits the government from interfering with freedom of religion, speech, assembly, and the press.