Stock Y has an expected excess return of 10% and its beta is 1.25. The Market portfolio expectedreturn is 8% and the risk - free rate is 2%. What is the alpha of Stock Y?

Alpha measures the excess return of an investment compared to what would be expected given its risk,…

Answered: Stock Y has an expected excess return…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 12P: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average...

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Stock Y has an expected excess return of 10% and its beta is 1.25. The Market portfolio expected return is 8% and the risk - free rate is 2%. What is the alpha of Stock Y?