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

question 65

Multiple Choice

Exhibit 5-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{ccccc}\text { Stock } & \mathrm{R}_{\text {it }} & \mathrm{R}_{\text {mt }} & \mathrm{a}_{\mathrm{i}} & \text { Beta } \\\hline \mathrm{A} & 10.6 & 15 & 0 & 0.8 \\\mathrm{Z} & 9.8 & 8.0 & 0 & 1.1\end{array}$
R_it = return for stock i during period t
R_mt = return for the aggregate market during period t
-Refer to Exhibit 5-5. What is the abnormal rate of return for Stock A when you consider its systematic risk measure (beta) ?

• A) 1.40%
• B) -1.40%
• C) 2.80%
• D) -2.80%
• E) None of the above

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Definitions:

Business Product

Goods or services that are sold primarily to other businesses for use in production, resale, or operational purposes, rather than to the ultimate consumer.

Shopping Product

A type of product that consumers spend considerable time and effort in gathering information and comparing alternatives before making a purchase.

Discretionary Product

A product that consumers purchase based on personal preference and available income, as opposed to essential goods.

Convenience Product

Goods or services that consumers purchase frequently, immediately, and with minimal effort, such as bread, milk, or gas.