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Could you add the formulas, please? All questions a, b, c and d please Assume the economy consists of three types of people. 56% are
Could you add the formulas, please? All questions a, b, c and d please
Assume the economy consists of three types of people. 56% are fad followers, 39% are passive investors who have read this book and so hold the market portfolio, and 5% are informed traders. The portfolio consisting of all the informed traders has a beta of 1.55 and an expected return of 13%. The market expected return is 9%. The risk-free rate is 4%. a. What alpha do the informed traders make? b. What is the alpha of the passive investors? c. What is the expected return of the fad followers? d. What alpha do the fad followers make? a. What alpha do the informed traders make? The alpha that the informed traders make is \%. (Round to two decimal places.)Step by Step Solution
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