Problem 9

Intro

You've analyzed IBM's stock and expect it to deliver a return of 9% over the next year. The stock has a beta of 0.5. The risk-free rate is 2.5% and the expected market risk premium is 4.5%.

Attempt 2/10 for 9.5 pts.

Part 1

What is the security's expected alpha?

Submit

Attempt 1/10 for 10 pts.

Part 2

What is the security's expected alpha in equilibrium according to the CAPM?

Submit