Solved

Using the Single Index Model, What Is the Alpha of a Stock

Question 26

Multiple Choice

Using the single index model, what is the alpha of a stock with beta of 1.2, a market return of 14%, risk free rate of 3% and the actual return of the stock is 18%?


A) −1.37%
B) 0.75%
C) 1.80%
D) 2.11%
E) −3.12%

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q21: Suppose you held a well-diversified portfolio with

Q22: Assume that stock market returns do follow

Q23: Consider the single-index model. The alpha of

Q24: Assume that stock market returns do not

Q25: HAW Inc. has an estimated beta of

Q27: Analysts may use regression analysis to estimate

Q28: Suppose the following equation best describes the

Q29: The security characteristic line (SCL)<br>A) plots the

Q30: Assume that stock market returns do follow

Q31: If the index model is valid, _