Analysis of past monthly movements in IBM's stock price produces the following estimates: α = 2.5 percent and β = 1.6. If the market index subsequently rises by 12 percent in one month and IBM's stock price increases by 20 percent, what is the abnormal change in IBM's stock price?
A)+1.7 percent
B)+8 percent
C)−1.7 percent
D)+2.5 percent

Question

Quizplus · Accepted Answer

The Answer of Analysis of past monthly movements in IBM's stock price produces the following estimates: α = 2.5 percent and β = 1.6. If the market index subsequently rises by 12 percent in one month and IBM's stock price increases by 20 percent, what is the abnormal change in IBM's stock price?
A)+1.7 percent
B)+8 percent
C)−1.7 percent
D)+2.5 percent

Analysis of Past Monthly Movements in IBM's Stock Price Produces