Question
The market has 3 types of investors: 20% fad followers; 75% passive investors, and the remaining are informed traders. The portfolio of informed traders has
The market has 3 types of investors: 20% fad followers; 75% passive investors, and the remaining are informed traders. The portfolio of informed traders has a beta of 1.4, and expected return of 16%. The market has an expected return of 10%, and the risk-free rate is 4%. What is the alpha for the informed traders? Ans.: ________%.
- A. -2.4
- B. -.9
- C. 0.0
- D. 3.6
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Financial Management Theory And Practice
Authors: Prasanna Chandra
8th Edition
0071078401, 978-0071078405
