Google has a beta of 1.0.The annualized market return yesterday was 11%, and the risk-free rate is currently 5%.You observe that Google had an annualized return yesterday of 14%.Assuming that markets are efficient, this suggests that
A)bad news about Google was announced yesterday.
B)good news about Google was announced yesterday.
C)no news about Google was announced yesterday.
D)interest rates rose yesterday.

Question

Quizplus · Accepted Answer

If Google's annualized return yesterday was higher than the market return, it suggests that the market had positive expectations about the company as a whole. Therefore, good news about Google was likely announced yesterday.

Google Has a Beta of 1