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:

Ego Depletion

A state of diminished capacity to exercise self-control or focus, following a period of exertion in using one's self-control.

Self-Efficacy

An individual’s belief in their own capability to succeed in specific situations or accomplish a task.

Self-Compassion

The act of being kind and understanding to oneself in instances of pain or failure, rather than being harshly self-critical.

Components

Fundamental parts or elements that make up a system, process, or compound.