How are abnormal returns defined?

Select one:

a.

Positive return.

b.

Returns in excess of the risk-free rate.

c.

Returns in excess of the market return.

d.

Returns in excess of the risk-adjusted expected return.

Question 11

If interest rates in New Zealand are high and New Zealand inflation is expected to be low, __________________.

Select one:

a.

foreigners will not invest in New Zealand because of the uncertainty

b.

foreigners can expect to earn high real returns if they invest in New Zealand

c.

foreigners can expect to earn low real returns if they invest in New Zealand

d.

foreigners can expect to earn negative return if they invest in New Zealand

Question 12

If the expected returns on an investment are uncorrelated with the market, its beta value is ____________________.

Select one:

a.

-1

b.

0

c.

+1

d.

equal to beta of the market