Question: Abnormal returns, if a stock has a(Alpha)=.004, b(Beta)=1.2, Using the market model (eq. 7.4), find the expected percent return if the market increases by 2%.

Abnormal returns, if a stock has a(Alpha)=.004, b(Beta)=1.2,

  1. Using the market model (eq. 7.4), find the expected percent return if the market increases by 2%. (Online fill in 1)
  2. If the actual return is 2%, 3%, or 4%, calculate the abnormal return. (Online fill in 2)

  1. If a stock costs $55 one month and drops to $45 the next month, what is the expected stock price the next month, if we assume the stock follows a random walk? (Online fill in 3)
  2. Explain both technical and fundamental analysis and what form of the efficient market hypothesis corresponds to each. (Online fill in 4)

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