1. 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%

   1. A>C>D>B

   2. C>D>B>A

   3. B>C>D>A

   4. D>A>B>C

   5. C>B>A>D

2. 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. 1.22

   2. 1.48

   3. 1.55

   4. 1.64

   5. 1.82