14. Assume the return on a market index represents the common factor and all stocks in the economy have a beta of 1. Firm-specific returns all have a standard deviation of 43%. Suppose an analyst studies 20 stocks and finds that one-half have an alpha of 2.4%, and one-half have an alpha of 2.4%. The analyst then buys $1.5 million of an equally weighted portfolio of the positive-alpha stocks and sells short $1.5 million of an equally weighted portfolio of the negative-alpha stocks.

Required:

a. What is the expected profit (in dollars)? (Enter your answers in dollars not in millions. Do not round intermediate calculations. Round your answers to the nearest dollar amount.)