Music Doctors has a beta of 2.25. The annualized market return yesterday was 12%, and the risk-free rate is currently 4%. You observe that Music Doctors had an annualized return yesterday of 15%. Assuming that markets are efficient, this suggests that A. no news about Music Doctors was announced yesterday. B. interest rates rose yesterday. C. interest rates fell yesterday. D. good news about Music Doctors was announced yesterday. E. bad news about Music Doctors was announced yesterday.
Music Doctors has a beta of 2.25. The annualized market return yesterday was 12%, and the risk-free rate is currently 4%. You observe that Music Doctors had an annualized return yesterday of 15%. Assuming that markets are efficient, this suggests that A. no news about Music Doctors was announced yesterday. B. interest rates rose yesterday. C. interest rates fell yesterday. D. good news about Music Doctors was announced yesterday. E. bad news about Music Doctors was announced yesterday.
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 14P
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Music Doctors has a beta of 2.25. The annualized market return yesterday was 12%, and the risk-free rate is currently 4%. You observe that Music Doctors had an annualized return yesterday of 15%. Assuming that
A. no news about Music Doctors was announced yesterday.
B. interest rates rose yesterday.
C. interest rates fell yesterday.
D. good news about Music Doctors was announced yesterday.
E. bad news about Music Doctors was announced yesterday.
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