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Consider an Asset That Has a Beta of 1

Question 12

Multiple Choice

Consider an asset that has a beta of 1.5. The return on the risk-free asset is 6.5 percent and the expected return on the stock index is 15 percent. The estimated return on the asset is 20 percent. Calculate the alpha for the asset.


A) 19.25 percent
B) 0.75 percent
C) -0.75 percent
D) 9.75 percent
E) 9.0 percent

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