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

question 68

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 A when you consider its systematic risk measure (beta) ?

• A) 2.30%
• B) 2.10%
• C) 3.10%
• D) 12.40%
• E) None of the above

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Definitions:

Total Liabilities

The aggregate of all debts and obligations owed by a company, reported on the balance sheet.

Shareholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth belonging to shareholders.

Total Assets

The aggregate of all financial resources owned by a company, including current and non-current assets, which reflects its total economic value.

Statement Of Income

A financial document showing a company's revenue, expenses, and profits over a specific period, also known as an income statement.