Use the Following Information to Answer the Question(s)below

question 4

Multiple Choice

Use the following information to answer the question(s) below.
Assume that the economy has three types of people.20% are fad followers,75% are passive investors,and 5% are informed traders.The portfolio consisting of all informed traders has a beta of 1.4 and an expected return of 16%.The market has an expected return of 10% and the risk-free rate is 4%.
-The alpha for the informed investors is closest to:

• A)-2.4%.
• B)-0.9%.
• C)0.0%.
• D)3.6%.

---

Definitions:

Marijuana

A psychoactive drug from the Cannabis plant used for medical or recreational purposes, known for its sedative and mood-altering effects.

Methamphetamine

A powerful, highly addictive stimulant that affects the central nervous system, known for its use as an illicit drug.

Schizophrenics

Individuals diagnosed with schizophrenia, a mental disorder characterized by distorted thinking, perceptions, emotions, and behaviors.

Information Processing

A psychological and computational approach to understanding how humans and machines interpret, store, and manipulate information.