12.. Annualized performance data regarding the Freedelity Fund and the market over the past 10 years is follows:

Freedelity Fund return = 12%

Freedelity Fund beta = 1.35

S&P 500 return = 10%

Risk free rate = 3%.

Which of the following best describes this situation?

A. The Freedelity fund under performed the market after adjusting for systematic risk

B. The Fund's results over the past 10 years provide conclusive evidence that markets are semi strong efficient.

C. The Freedility Fund's CAPM alpha was .45% per year

D. All statements accurately reflect this situation

E. The Freedelity Fund added value since the funds return exceeded that of the S%P 500 by 2% per year

10.. Common stock of Drone Inc. has a fair value expected a return of 10%.

The S&P 500 return is 12% and the risk-free rate is 5%.

What is Drone Inc's beta coefficient?

Stock Expected Return Beta

A 12% 1.3

B 15% 1.5

A. The fair value return of stock B is 14%

B. All of these statements are true

C. The fair value return of stock A is 12.8%

D. Stock B can be bought at a bargain

E. Stock A is overpriced