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

question 42

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 fad follower's portfolio is closest to:

• A)-0.9%.
• B)0.0%.
• C)3.6%.
• D)6.0%.

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Definitions:

Consignor

The one who consigns merchandise to the consignee.

FIFO Method

First-In, First-Out method; an inventory valuation approach where goods first purchased or produced are the first to be sold.

Gender Roles

Gender roles encompass the behaviors, tasks, and responsibilities that a society considers appropriate for men, women, and other gender identities, often influencing personal identity and social practices.

Businesses Money

Financial resources owned or used by a business to operate, expand, and achieve its objectives, including revenue, investments, and loans.