In: Finance
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%?
Ans 0.00%
ALPHA OF STOCK = | ACTUAL RETURN- ( (Risk free Return + (Market Return - Risk free return)* Beta)) |
15% - ((5% + (10% - 5%)*2)) | |
0.00% |