You are analyzing an equity security with the following attributes:

Expected return: 14.5% CAPM beta: 1.25 SMB beta: .80 HML beta: -.45

You also collect the following data regarding the market in general:

5.

True or false: observed market "factors", such as those related to a stock's market capitalization (i.e., size), value or growth orientation, and/or price momentum are evidence of violations of arbitrage price theory. Please explain your answer.

Equity risk premium: SMB spread:

HML spread:

Risk free rate:

7.70% 2.25% 1.00% 3.75%

Using this data and the Fama-French model, determine the expected alpha of this security.