Question: Assuming the risk-free rate is 2% and the expected return on the market portfolio is 10%. A firm considers a project with an estimated beta

Assuming the risk-free rate is 2% and the expected return on the market portfolio is 10%. A firm considers a project with an estimated beta of 1.5. If the IRR of the project is 10.2%, what is the project alpha?

A.

1.2%.
B.

0.7%.
C.

0.4%.
D.

0.2%.

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