Based on Stock Z's beta of 0.9 the normal return is 9%. However, the actual return for Stock Z was 8%. What is Stock Z's abnormal rate of return?
A)-1.0%
B)-0.1%
C)0.1%
D)1.0%
E)1.1%

Name: Based on Stock Z's beta of 0.9 the normal return is 9%. However, the actual return for Stock Z was 8%. What is Stock Z's abnormal rate of return? A)-1.0% B)-0.1% C)0.1% D)1.0% E)1.1%
Brand: Quizplus
Rating: 4.8 (32 reviews)

Question

Quizplus · Accepted Answer

The abnormal rate of return is calculated as the actual return minus the normal return. Here, it is 8% (actual) - 9% (normal) = -1.0%.

Based on Stock Z's Beta of 0