Consider the single-index model of returns that explains the returns of Nike. The alpha of Nike is 2%. The return on the market index (i.e., S&P 500) is 16%. The risk-free rate of return is 5%. Nike earns a return that exceeds the risk-free rate by 11%, and there are no firm-specific events affecting the stock performance. The ß of the stock is 1.33 0.75 1.50 0.67 0.82

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Consider the single-index model of returns that explains the returns of Nike. The alpha of Nike is 2%. The return
on the market index (i.e., S&P 500) is 16%. The risk-free rate of return is 5%. Nike earns a return that exceeds
the risk-free rate by 11%, and there are no firm-specific events affecting the stock performance. The ß of the
stock is
ooo
1.33
0.75
1.50
0.67
0.82
Transcribed Image Text:Consider the single-index model of returns that explains the returns of Nike. The alpha of Nike is 2%. The return on the market index (i.e., S&P 500) is 16%. The risk-free rate of return is 5%. Nike earns a return that exceeds the risk-free rate by 11%, and there are no firm-specific events affecting the stock performance. The ß of the stock is ooo 1.33 0.75 1.50 0.67 0.82
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