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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:
Out-group
A group to which an individual does not belong, often perceived as fundamentally different or in opposition to the in-group.
Collectivistic Cultures
Cultures that prioritize the needs and goals of the group over individual desires or accomplishments, emphasizing community, cooperation, and social harmony.
Community Cooperation
Refers to the collaborative efforts and mutual assistance within a community to achieve common goals or address shared concerns.
Individual Distinction
The aspects that make a person unique or set them apart from others, often related to personal achievements or characteristics.
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