Part $1$

Calculate the alpha values for the three stocks. What $is$ the alpha value for Ford?

Correct $$ ANSWER: $0\mathrm{.}032$

Risk premium $on$ the $S$&$P500$:

$R_M=r_M-r_f=0\mathrm{.}09-0\mathrm{.}02=0\mathrm{.}07$

Alpha:

$a_i=E(R_i)-{}_i{R}_M$

Part $2$

What $is$ the initial scaled weight for Ford $(such$ that the weights add $to1)?$

Part $3$

What $is$ the residual variance $of$ the active portfolio?

Part $4$

What $is$ the alpha $of$ the active portfolio?

Try again Part $5$

What $is$ the initial weight $on$ the active portfolio?

Part $6$

Attempt $\frac{2}{5}$ for $9\mathrm{.}9pts.$

What $is$ the beta $of$ the active portfolio?

Part $7$

What $is$ the adjusted weight $on$ the active portfolio?Part $8$

What fraction of risky assets should you put into Ford stock?

Part $9$

What is the expected return of the optimal risky portfolio?

Part $10$

What is the variance of the optimal risky portfolio?

Part $11$

What is the Sharpe ratio of the optimal risky portfolio?