1) Compute the abnormal rates of return for the following stocks during period t ( ignore differential systematic risk):

Stock Ri t Rmt

B 11.5% 4.0%

F 10.0 8.5

T 14.0 9.6

C 12.0 15.3

E 15.9 12.4

2)Compute the abnormal rates of return for the five stocks in Problem 1 assuming the following systematic risk measures ( betas):

Stock B1

B 0.95

F 1.25

T 1.45

C 0.70

E - 0.30