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Kamila [148]
3 years ago
15

The expected return on the market portfolio is 18%. The risk-free rate is 10%. The expected return on SDA Corp. common stock is

17%. The beta of SDA Corp. common stock is 1.25. Within the context of the capital asset pricing model, _________.
Business
1 answer:
svlad2 [7]3 years ago
8 0

Answer:

The answer is SDA Corp stocks alpha is -1.75%

Explanation:

CAPM E(r_{SDA}) = 10 + 1.25(17 - 10) =

                         = 10 + 1.25(7)=

                         = 10 + 8.75

                          = 18.75%

\alpha_Sda = 17 - 18.75

         = -1.75%

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