The alpha for company 2 is 1.66. Its beta is 0.291 and the expected return on the market is 4.60%. The expected return for company 2 according to the single index model is closest to Select one: O a. 4.60% O b. 1.00% O c. 1.85% O d. 3.00%

The alpha for company 2 is 1.66. Its beta is 0.291 and the expected return on the market is 4.60%. The expected return for company 2 according to the single index model is closest to Select one: O a. 4.60% O b. 1.00% O c. 1.85% O d. 3.00%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Stock Market Indices

Stock indexes are used to compare the price fluctuations of a group of stocks of similar companies, which are combined based on a similar industry or a particular market capitalization limit or type of market. The price comparison is based on a pre-determined standard method or indicators. These stock indexes are usually considered a base for comparison of a particular stock, and the performance of that particular company can be easily determined.

Question

The alpha for company 2 is 1.66. Its
beta is 0.291 and the expected return
on the market is 4.60%. The expected
return for company 2 according to
the single index model is closest to
Select one:
O a. 4.60%
O b. 1.00%
O C. 1.85%
O d.
3.00%

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