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:

Share Options

Financial instruments that give the holder the right, but not the obligation, to buy or sell shares of a company at a specific price within a certain timeframe.

Scientific Management

A theory of management that analyzes workflows to improve economic efficiency and labor productivity.

Hourly Wages

Compensation paid to employees based on the number of hours worked, typically expressed as an amount of money per hour.

Divided Tasks

The breaking down of tasks into smaller, more manageable parts to be completed by different individuals or teams, often to increase efficiency.