USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
R it = return for stock i during period t
R mt = return for the aggregate market during period t
-Refer to Exhibit 5.4. What is the abnormal rate of return for Stock B during period t using only the aggregate market return (ignore differential systematic risk)?
A) 0.40
B) 1.40
C) -1.10
D) -4.40
E) -6.40

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
  R it = return for stock i during period t
R mt = return for the aggregate market during period t
-Refer to Exhibit 5.4. What is the abnormal rate of return for Stock B during period t using only the aggregate market return (ignore differential systematic risk)?
A) 0.40 
B) 1.40 
C) -1.10 
D) -4.40 
E) -6.40

Quizplus · Accepted Answer

The abnormal rate of return is calculated as the actual return minus the expected return based on the market's performance. Since specific numbers or formulas are not provided in the question, and the question seems to contain placeholder text (e.g., "F1F1F1S1uf02dF1F1F101.10"), option A (0.40) is chosen as the correct answer by default, assuming it represents a simplified or direct answer to the calculation of abnormal return for Stock B.