Question

In: Finance

Assume that the economy has three types of people. 20% are fad followers, 70% are passive...

Assume that the economy has three types of people. 20% are fad followers, 70% are passive investors, and 10% are informed traders. The portfolio consisting of all informed traders has a beta of 1.2 and an alpha of 4.55%. The market has an expected return of 9% and the risk-free rate is 3%. What is the alpha for the fad followers? Enter your answer as a percentage to two decimal places (i.e. 0.12% rather than 0.0012; the percent sign is not necessary).

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Assume that the economy has three types of people. 15% are fad followers, 75% are passive...
Assume that the economy has three types of people. 15% are fad followers, 75% are passive investors, and 10% are informed traders. The portfolio consisting of all informed traders has a beta of 1.3 and an alpha of 2.62%. The market has an expected return of 12% and the risk-free rate is 4 %. What is the alpha for the fad followers? Enter your answer as a percentage to two decimal places (i.e. 0.12% rather than 0.0012; the percent sign...
Assume that the economy has three types of people. 15% are fad followers, 75% are passive...
Assume that the economy has three types of people. 15% are fad followers, 75% are passive investors, and 10% are informed traders. The portfolio consisting of all informed traders has a beta of 1.3 and an alpha of 2.21%. The market has an expected return of 12% and the risk-free rate is 4 %. What is the alpha for the fad followers? Enter your answer as a percentage to two decimal places (i.e. 0.12% rather than 0.0012; the percent sign...
There is a 20 percent probability the economy will boom, 70 percent probability it will be...
There is a 20 percent probability the economy will boom, 70 percent probability it will be normal, and a 10 percent probability of a recession. Stock A will return 18 percent in a boom, 11 percent in a normal economy, and lose 10 percent in a recession. Stock B will return 9 percent in boom, 7 percent in a normal economy, and 4 percent in a recession. Stock C will return 6 percent in a boom, 9 percent in a...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a boom state is 0.2, a normal state is 0.5, and a recession state is 0.3. And there are three stocks in this economy, called Alpha, Beta, and Gamma respectively. The return performance of these stocks has been summarized by the following table: Alpha Beta Gamma boom 15% 28% 1% normal 6% 12% 3% recession -12% -30% 20% (Please show your intermediate processes, instead of...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a boom state is 0.2, a normal state is 0.5, and a recession state is 0.3. And there are three stocks in this economy, called Alpha, Beta, and Gamma respectively. The return performance of these stocks has been summarized by the following table: Alpha Beta Gamma boom 15% 28% 1% normal 6% 12% 3% recession -12% -30% 20% (Please show your intermediate processes, instead of...
A. There are three types of taxable income; 1. active, 2. portfolio, 3. passive.  Describe each (in...
A. There are three types of taxable income; 1. active, 2. portfolio, 3. passive.  Describe each (in your own words) and make sure you understand the tax implications of these incomes. B. Debra Ferguson received the items and amounts of income shown below during 2016. Help her calculate, (a) her gross income and (b) that portion (dollar amount) of her income that is tax exempt. Salary                                                      $33,500 Dividends                                                  800           Gift from mother                                       500 Child support from ex-husband                3,600 Interest on savings...
Suppose there are two types of workers in the economy, A and B. Assume that type...
Suppose there are two types of workers in the economy, A and B. Assume that type A workers are, on average, more productive than type B workers (for instance, type A workers might have access to better schools than type B workers). Explain how it could be the case that some firms choose not to hire type B workers, even if: (a) qualified type B workers to apply for open jobs, and (b) the firms are prejudiced in any way....
A company manufactures three types of luggage: economy, standard, and deluxe.
  A company manufactures three types of luggage: economy, standard, and deluxe. Thecompany produces 1000 pieces each month. The cost for making each type of luggage is$20 for the economy model, $30 for the standard model, and $40 for the deluxe model.The manufacturer has a budget of $25,700. Each economy piece requires 6 hours oflabor, the standard model requires 8 hours of labor and the deluxe requires 12 hours oflabor. The manufacturer has a total of 7400 hours of labor...
An economy has 100 people divided among the following groups: 25 have full-time jobs, 20 have...
An economy has 100 people divided among the following groups: 25 have full-time jobs, 20 have one part-time job, 5 have two part-time jobs, 10 would like to work and are looking for jobs, 10 would like to work but are so discouraged they have given up looking, 10 are running their own businesses, 10 are retired, and 10 are small children. 1.Calculate the labor force and the labor-force participation rate. 2.   Calculate the number of unemployed and the unemployment...
HiTech Products manufactures three types of remote control devices Economy.
HiTech Products manufactures three types of remote control devices Economy. Standard and Deluxe The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below ActivityCostCost DriverMaterial handling$ 225,000Number of partsMaterial insertion2,475,000Number of partsAutomated machinery840,000Machine hoursFinishing170,000Direct labor hoursPackaging170,000Orders shipped Total   $3,880,000 The following information pertains to the three product lines for next year: Units to be producedEconomyStandardDeluxeOrders to be shipped10,0005,0002,000Number of parte per unit1,000500200Machine hours per unit135Labor hours per unit22217....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT