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Last year you bought a stock with a beta of 1.5. The stock earned 17.5% this ye…
Related Topics
Wize University Introduction to Finance Textbook > CAPM
Alpha
3 Activities
Last year you bought a stock with a beta of 1.5. The stock earned 17.5% this year and the market during that time earned 15.4%. The risk free rate was 4%.
A) The stock exceeded the required rate of return by 3.6%
B) The stock was underpriced when you bought it
C) The stock was correctly priced when you bought it
D) The stock's return was 3.6% below the required rate of return
I don't know
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More Alpha Questions:
Last year you bought a stock with a beta of 0.9. The stock earned 16% this year and the market during that time earned 12%. The risk free rate was 4%. Calculate the stock's alpha.
Which of the following statements is/are false?