Question: Question 2 (5 points) Someone with insider knowledge tells you a stock will have a 10% return next year. You decide to use the CAPM

Question 2 (5 points) Someone with insider knowledge tells you a

Question 2 (5 points) Someone with insider knowledge tells you a stock will have a 10% return next year. You decide to use the CAPM to determine the expected return assuming a 1-year T- bill rate of 0.015, market risk premium of 0.06, and stock beta of 1.75. What will the alpha of this stock be (assuming the insider is correct)? (closest answer) ba 1% 2% -2% 10%

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