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

question 44

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 passive investors is closest to:

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

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Definitions:

Procedural Justice

The fairness and transparency of the processes that lead to outcomes, having an impact on perceptions of fairness in organizational and social settings.

Reward Allocations

The process of distributing benefits, recognition, or compensation among members of a group or organization based on criteria such as performance, contribution, or need.

Confirmatory Bias

The tendency to search for, interpret, and remember information in a way that confirms one's preconceptions, leading to statistical errors.

Group Disagreement

The occurrence of differing opinions, views, or decisions among members within a group.