Consider an Asset That Has a Beta of 1

question 21

Multiple Choice

Consider an asset that has a beta of 1.5.The return on the risk-free asset is 6.5% and the expected return on the stock index is 15%.The estimated return on the asset is 20%.Calculate the alpha for the asset.

• A) 19.25%
• B) 0.75%
• C) -0.75%
• D) 9.75%
• E) 9.0%