Someone with insider knowledge tells you a stock will have a 10% return next year. You decide to use the CAPM to determine the expected return assuming a 1-year T-bill rate of 0.015, market risk premium of 0.06, and stock beta of 1.75. What will the alpha of this stock be (assuming the insider is correct)? (closest answer)

1.)1%

2.)2%

3.)-2%

4.)10%

2.) Someone with insider knowledge tells you a stock will have a 10% return next year. You decide to use the CAPM to determine the expected return assuming a 1-year T-bill rate of 0.015, market risk premium of 0.06, and stock beta of 1.75. What will the alpha of this stock be (assuming the insider is correct)? (closest answer)

1.) biased capm

2.)consumption capm

3.) fama and french

4.)nothing

3.) You have noticed that stocks which are infrequently traded and have few shares outstanding have very high alphas, based on the Fama-French three factor model. If an investor wanted to sell one of these stocks quickly, they would very likely have to sell at a significant discount. These stocks are termed _____________________. Question

1.)illiquid

2.) large cap

3.)liquid

4.) small cap

4.)If the Federal Reserve's buys treasuries what happens to the value of a dollar (in a vacuum)? Question 5 options: increases decreases Nothing