A Portfolio Has a Beta of 1

question 25

Multiple Choice

A portfolio has a beta of 1.52 and an actual return of 13.7 percent.The risk-free rate is 2.7 percent and the market risk premium is 7.8 percent.What is the value of Jensen's alpha?

• A)-0.86 percent
• B)1.01 percent
• C)1.14 percent
• D)1.23 percent
• E)1.37 percent

---

Definitions:

Oxidation

Oxidation is a chemical reaction involving the loss of electrons by an atom, molecule, or ion.

Oxidation Number

A number assigned to an element in chemical combination which represents the number of electrons lost or gained by an atom of that element in the compound.

Compound

A substance made up of atoms of two or more different elements chemically bonded together.

Oxidation Number

A number that represents the total number of electrons an atom either gains or loses in order to form a chemical bond with another atom.