Compute the abnormal rates of return for the following stocks during period t (ignore differential systematic risk): Stock % % % % BFTCE Rit = return for stock i during period t Rmt = return for the aggregate market during period t Use a minus sign to enter negative values, if any. Round your answers to one decimal place. ARB: ARR: ARTI: ARA: ARE: % C Rit 11.5% 9.2 12.5 12.5 15.9 Rmt 4.7% 6.2 6.6 15.2 11.1
Compute the abnormal rates of return for the following stocks during period t (ignore differential systematic risk): Stock % % % % BFTCE Rit = return for stock i during period t Rmt = return for the aggregate market during period t Use a minus sign to enter negative values, if any. Round your answers to one decimal place. ARB: ARR: ARTI: ARA: ARE: % C Rit 11.5% 9.2 12.5 12.5 15.9 Rmt 4.7% 6.2 6.6 15.2 11.1
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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![**Abnormal Rates of Return Calculation**
To determine the abnormal rates of return for the given stocks during period \( t \) (ignoring differential systematic risk), follow the provided data and instructions.
### Given Data:
| Stock | \( R_{it} \) (Return for stock \( i \) during period \( t \)) | \( R_{mt} \) (Return for the aggregate market during period \( t \)) |
|-------|----------------------------------------|--------------------------------------------------------|
| B | 11.5% | 4.7% |
| F | 9.2% | 6.2% |
| T | 12.5% | 6.6% |
| C | 12.5% | 15.2% |
| E | 15.9% | 11.1% |
To calculate the abnormal return (\( AR_{it} \)) for each stock:
\[ AR_{it} = R_{it} - R_{mt} \]
### Instructions:
- Use a minus sign to indicate negative values, if any.
- Round your answers to one decimal place.
### Abnormal Return Calculation:
**Stock B:**
\[ AR_{B,t} = 11.5\% - 4.7\% = 6.8\% \]
**Stock F:**
\[ AR_{F,t} = 9.2\% - 6.2\% = 3.0\% \]
**Stock T:**
\[ AR_{T,t} = 12.5\% - 6.6\% = 5.9\% \]
**Stock C:**
\[ AR_{C,t} = 12.5\% - 15.2\% = -2.7\% \]
**Stock E:**
\[ \ AR_{E,t} = 15.9% - 11.1% = 4.8% \ ]
### Input Fields for Abnormal Returns:
- **AR\(_{B,t}\)**: 6.8%
- **AR\(_{F,t}\)**: 3.0%
- **AR\(_{T,t}\)**: 5.9%
- **AR\(_{C,t}\)**: -2.7%
- **AR\(_{E](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd3485286-e420-456a-8a41-5bc62e18ff5f%2Fe1efbd69-b779-4ef9-91bb-5f16825bc87c%2F62cgtw_processed.png&w=3840&q=75)
Transcribed Image Text:**Abnormal Rates of Return Calculation**
To determine the abnormal rates of return for the given stocks during period \( t \) (ignoring differential systematic risk), follow the provided data and instructions.
### Given Data:
| Stock | \( R_{it} \) (Return for stock \( i \) during period \( t \)) | \( R_{mt} \) (Return for the aggregate market during period \( t \)) |
|-------|----------------------------------------|--------------------------------------------------------|
| B | 11.5% | 4.7% |
| F | 9.2% | 6.2% |
| T | 12.5% | 6.6% |
| C | 12.5% | 15.2% |
| E | 15.9% | 11.1% |
To calculate the abnormal return (\( AR_{it} \)) for each stock:
\[ AR_{it} = R_{it} - R_{mt} \]
### Instructions:
- Use a minus sign to indicate negative values, if any.
- Round your answers to one decimal place.
### Abnormal Return Calculation:
**Stock B:**
\[ AR_{B,t} = 11.5\% - 4.7\% = 6.8\% \]
**Stock F:**
\[ AR_{F,t} = 9.2\% - 6.2\% = 3.0\% \]
**Stock T:**
\[ AR_{T,t} = 12.5\% - 6.6\% = 5.9\% \]
**Stock C:**
\[ AR_{C,t} = 12.5\% - 15.2\% = -2.7\% \]
**Stock E:**
\[ \ AR_{E,t} = 15.9% - 11.1% = 4.8% \ ]
### Input Fields for Abnormal Returns:
- **AR\(_{B,t}\)**: 6.8%
- **AR\(_{F,t}\)**: 3.0%
- **AR\(_{T,t}\)**: 5.9%
- **AR\(_{C,t}\)**: -2.7%
- **AR\(_{E
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