Informed traders ought to be able to beat the market. Assume that the portfolio of the average informed trader has a beta () of 1.5 and an expected return of 14%. If the expected return on the market is 8% and the risk-free rate is 3%, then what is the average alpha () of these informed traders portfolios?

Select one:

a.

7.0%

b.

4.0%

c.

-3.5%

d.

3.5%