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%
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Question

Quizplus · Accepted Answer

Abnormal Return?_t = actual return - market based return Abnormal Return?_t= 8.0% - 9.0% = -1.0%

Based on Stock Z's Beta of 0