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You have earned 15% on a stock, the beta is 1.0, the three month t-bill is at 2%, and the return expected for the overall
You have earned 15% on a stock, the beta is 1.0, the three month t-bill is at 2%, and the return expected for the overall market was 12%. Was this is a good investment?
No- it was too risky and the volatility was too high given the 1.0 beta | ||
Yes- higher returns than the market are always good | ||
Yes- it generated a return that was higher than that expected from the CAPM model (positive alpha) | ||
No- it actually performed in-line with the market, given it has a 1.0 beta |
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