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kifflom [539]
3 years ago
14

You are evaluating a fund that had an annual average return of 7.2%. During that time, the average risk-free rate was 1.5% and t

he average market return was 8%. If the fund's beta is 0.8, what was its alpha? Answer in percent, rounded to one decimal place (e.g. 4.32% = 4.3).
Business
1 answer:
PilotLPTM [1.2K]3 years ago
7 0

Answer:

Risk free rate(Rf) = 1.5%

Market return(Rm) = 8%

Beta(β) = 0.8

ER(P) = Rf  + β(Rm – Rf)

ER(P) = 1.5 + 0.8(8-1.5)

ER(P) = 1.5 + 0.8(6.5)

ER(P) = 1.5 + 5.2

ER(P) = 6.7%

Alpha = Annual average return - ER(P)

         = 7.2% - 6.7%

         = 0.5%

Explanation:

In this case, we will calculate the expected return on the stock based on CAPM. Thereafter, we will calculate alpha by deducting the expected return from annual average return.

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inn [45]

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No

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When might term insurance be a better option than whole life insurance?
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6 0
4 years ago
Read 2 more answers
Which of the following would be a good indication that an applicant might be
Harrizon [31]

Answer: D. A very friendly and engaging personality during the interview that  just makes the interviewer like the applicant

Explanation:

To be a great sales associate one skill is paramount, interpersonal skills.

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The person in option D has this and as such has a better chance of being a good sales associate at the retail store.

3 0
3 years ago
If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 10 percent
Misha Larkins [42]

Answer:

 c. $360 increase in excess reserves and a $40 increase in required reserves

Explanation:

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= 0.1 × $400 = $40

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Excess reserve = Deposit - Required reserve = $400 - $40 = $360

I hope my answer helps you

4 0
3 years ago
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