Question

In: Finance

If the risk-free rate is 5% and the return on the market is 10%, what is...

If the risk-free rate is 5% and the return on the market is 10%, what is alpha equal to for a stock with a beta of 2 that has an expected return of 15%?

Solutions

Expert Solution

Ans 0.00%

ALPHA OF STOCK = ACTUAL RETURN- ( (Risk free Return + (Market Return - Risk free return)* Beta))
15% - ((5% + (10% - 5%)*2))
0.00%

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