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%

---

Definitions:

Simultaneous Move Game

A type of game theory scenario where all participants choose their actions without knowledge of the others' decisions at the same time.

Nash Equilibrium

A concept in game theory where no player can benefit by changing their strategy while the other players keep theirs unchanged.

High Price

A cost that is considered to be at the upper end of the price range for a product or service.

Low Price

An amount charged for a product or service that is relatively lower than the average or general market level, often aimed at attracting customers or gaining market share.