Problem $4$

Assume the risk$-$free rate is $3\mathrm{.}22\%$ and the market return is expected to be $7\mathrm{.}64\%.$ Five

stocks $($A$,$ B$,$ C$,$ D & E$)$ have the following beta ratios respectively: $0\mathrm{.}82$;$1\mathrm{.}42$;$1\mathrm{.}96$;$0\mathrm{.}48$ and $0\mathrm{.}97.$

Their expected returns are $9\mathrm{.}12$;$8\mathrm{.}84$;$10\mathrm{.}21$;$7\mathrm{.}02$ and $8\mathrm{.}11\%.$ Define which stocks are more

preferable for an investor in terms of their risk and return and which are less.

Problem $5$

Using problem $4$ data compute alpha ratios for all stocks.