Question
Rank the following stocks from the highest to lowest alpha, given the risk-free rate of 3.1 percent and the market risk premium of 8 percent
-
Rank the following stocks from the highest to lowest alpha, given the risk-free rate of 3.1 percent and the market risk premium of 8 percent [Hint: alpha is the difference between the actual and expected return]
Stock A : Beta=0.81 and actual return=9%
Stock B: Beta=1.00 and actual return=12.88%
Stock C: Beta=0.92 and actual return=11.92%
Stock D: Beta=1.14 and actual return=12.22%
-
A>C>D>B
-
C>D>B>A
-
B>C>D>A
-
D>A>B>C
-
C>B>A>D
-
- Question 14
2 Points
What is the beta of on a stock with an expected return of 21% given the risk-free rate is 3% and the expected return on the market is 14%?
-
1.22
-
1.48
-
1.55
-
1.64
-
1.82
-
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started