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Using the market model, the alpha of a stock is 4.0%, the beta if 0.9 and the excess market return is 10%. What is the
Using the market model, the alpha of a stock is 4.0%, the beta if 0.9 and the excess market return is 10%. What is the residual error given an actual excess return of the stock of 15%?
a. 0.0%
b. 1.0%
c. 2.0%
d. 3.0%
(answer is C, but how do I get that?)
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