Security a Has an Expected Rate of Return of 12

question 12

Multiple Choice

Security A has an expected rate of return of 12% and a beta of 1.1. The market expected rate of return is 8%, and the risk-free rate is 5%. The alpha of the stock is ________.

• A) -1.7%
• B) 3.7%
• C) 5.5%
• D) 8.7%

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Definitions:

Time-Driven

A model or approach that bases analysis, costing, or scheduling on the amount of time required to perform tasks.

Activity-Based Costing

A technique for allocating costs to products or services based on the resources they consume.

Receiving Calls

The act or process of accepting incoming telephone calls, often in a business context for customer service.

Time-Driven

A method or model that assigns resource costs based on the actual time units consumed by an activity or process.