You have run a regression of stock returns against market returns, using monthly data over the last three years for BookScape. The regression equation is reproduced below:

ReturnsBookScape = 1.50% + 1.05 (ReturnsS&P 500) Assuming that the average annual riskfree rate during the period was 5.4%, estimate the Jensens alpha for this stock, in annualized terms.

SHOW ANSWERS IN EXCEL AND HOW YOU GOT THEM

Hint: Use monthly risk free rate.