A security has an expected rate of return of 0.10 and a beta of 1.1. The market expected rate of return is 0.08, and the risk-free rate is 0.05. The alpha of the stock is
A) 1.7%.
B) -1.7%.
C) 8.3%.
D) 5.5%.

Name: A security has an expected rate of return of 0.10 and a beta of 1.1. The market expected rate of return is 0.08, and the risk-free rate is 0.05. The alpha of the stock is A) 1.7%. B) -1.7%. C) 8.3%. D) 5.5%.
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Question

Quizplus · Accepted Answer

10% - [5% +1.1(8% - 5%)] = 1.7%.

A Security Has an Expected Rate of Return of 0