Specific return, can somebody explain please
From 2016 mock from finquiz:
An equity analyst is using the market model to analyze the returns to a stock.
During the recent year, the market rose by 5% and the stock rose by 8%. The beta
for the stock is 0.66 and alpha is 0.02. Risk free rate is 0 percent. The companyspecific
return to the stock during the recent year is closest to:
Correct Answer: A
CFA Level I, Volume 4, Study Session 12, Reading 44
Specific return: 0.08 - (0.02 + 0.66 × 0.05) = 2.7%
did not see it on the curriculum…. because it is not the jensen alpha formula… what is it?? thank you!!
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