Assume that you bought one share of Sanderson Farms stock last year. On April 17, 2019 you paid $110 per share. On April 17, 2020 you sold it for $130 per share. It has paid only one dividend over the year. It paid a dividend of $5 per share on April 17, 2020.

Below are the current market and firm conditions.

Return on the Market is 10%

Beta of Sanderson Farms stock = 1.7

Return on a portfolio with a standard deviation of zero is 2%

a) What is Alpha equal to?

b) Are you happy with that Alpha?

1. Yes
2. No