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Security a Has an Expected Rate of Return of 0

Question 40

Multiple Choice

Security A 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%.
E) none of these.

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