Need help with this financial accounting question Analyzing the rates of return on Elite Textile's ordinary shares over60 months indicates a beta of 1.25 and an alpha of 0.5% per month.The following month, the market rose by 4 percent, and Elite Textilerose by 6 percent.What is Elite Textile's abnormal rate of return?

Step 1: Definition of Abnormal Return Abnormal return refers to the portion of an investment's…

Answered: Analyzing the rates of return on Elite…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 17P

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Analyzing the rates of return on Elite Textile's ordinary shares over 60 months indicates a beta of 1.25 and an alpha of 0.5% per month. The following month, the market rose by 4 percent, and Elite Textile rose by 6 percent. What is Elite Textile's abnormal rate of return?