Question: 8) Using the single index model, what is the alpha of a stock with beta of 1.3, a market return of 14%, risk free rate

8) Using the single index model, what is the alpha of a stock with beta of 1.3, a market return of 14%, risk free rate of 4% and the actual return of the stock is 14%? A) 1.80% B) -3.00% C) -1.37% D) 0.75% E) 2.11%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Using the single index model, what is the alpha of a stock with beta of 1.3, a market return of 1496, risk free rate of 496 and the actual return of the stock is 1496? Spreadsheet 16018.xlsx 1.8096 0...

those are mcq questions. please answer all , no need to explain. thanks in advance 1. You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with two...

Constant Growth Model P=D1/(K-g) Example 1 Example 2 Example 3 Example 4 Example 5 Example 6 D1 2.05 4.1 1.25 2.15 6.35 2.25 K 11% 15% 8% 18% 12% 13% g 9% 10% 5% 10% 5% 8% P= 0.041 0.205 0.0375 0.172...

Modern Portfolio Concepts CAPM RRR= RFR + (Beta x (Market Return - RFR)) Risk Free Rate 4.0% 3.5% 2.5% BETA 1.09 2.00 1.25 Market Return 8% 13% 14% Risk Free Rate 4.0% 3.5% 2.5% RRR 8.36% 22.50%...

I need help figuring out question number 4 in excel. Please put in formulas so I can understand what I am doing wrong. Background Info My answers for 1-3 **This is all of question 4 in which I have...

Can you answer these questions in today? Ql (25pts) Mr Bean owns a portfolio with the following characteristics: Ar& CEO Security Factor Seps. Proportion Exp. Return A. feco A 0.6 04 12% 0.3 0.3 15%...

GROUP ASSIGNMENT 1. Select a company and submit your choice. 2. Provide the reason(s) for your choice, a description, a brief History of the firm, its lines of business, and the firm's competitors....

2. Suppose you have the following assets and their characteristic's as below Security ei (%) a(%) 2 Covariance with the market (%) 0 7-3 2 12 2 A B D 2 3 1 4 1 2 1 3 & 13 F Elo Expected Market Return...

What is Amazon's WACC? Note: Amazon does not have r preferred stock. Apply the CAPM to estimate the cost of equity using the expected market return and risk- free rate from the Walmart WACC estimate....

1. Last year, Ahmed corp. issued 10-year 5 % coupon bonds with face value of $500 each. If then market rate for Ahmed's risk class was 6 % , how much money did the firm raise from each bond? 2....

Using the Gordon Growth Model, the CAPM and assuming equilibrium in the equity market, express Beta as a function of the other variables. If a firm targets a B = 1.25, what must it do to achieve this...

Select a fairly inexpensive product that you currently own, and a country that you're not very familiar with. The product could be a moderately priced watch, radio, or other device. Now imagine that...

Provide the definition of a Bond. Name 4 types of Bonds and outline the details of each.

P-1) (100 Pts.) A chemical manufacturing company (CMC) has a contract for the procurement of the neccssaly chemicals from four suppliers. The chemicals purchased from Supplier A are priced at $20...

11. Are your speaking notes helpful and effective?

3. Pay attention to how you meet people and the general first impression you receive from them. Ask yourself what makes you feel the way you do about the person. Does the person make you feel...

The Goals of Informative Speaking Topics for Informative