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Rank the following stocks from the highest to lowest alpha, given the risk-free rate of...

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Finance

  1. Rank the following stocks from the highest to lowest alpha, given the risk-free rate of 3.1 percent and the market risk premium of 8 percent [Hint: alpha is the difference between the actual and expected return]

    Stock A : Beta=0.81 and actual return=9%

    Stock B: Beta=1.00 and actual return=12.88%

    Stock C: Beta=0.92 and actual return=11.92%

    Stock D: Beta=1.14 and actual return=12.22%

    1. A>C>D>B

    2. C>D>B>A

    3. B>C>D>A

    4. D>A>B>C

    5. C>B>A>D

  2. Question 14

    2 Points

    What is the beta of on a stock with an expected return of 21% given the risk-free rate is 3% and the expected return on the market is 14%?

    1. 1.22

    2. 1.48

    3. 1.55

    4. 1.64

    5. 1.82

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