What is the alpha for the fad followers

Assignment Help Financial Management

Reference no: EM131568936

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 alpha of 2.07%. The market has an expected return of 10% and the risk-free rate is 4 %.

What is the alpha for the fad followers? Enter your answer as a percentage to two decimal places (i.e. 0.12% rather than 0.0012; the percent sign is not necessary).

Reference no: EM131568936

Questions Cloud

Betas tend to revert toward zero over time : Evidence suggests that betas tend to revert toward zero over time. We should be suspicious of beta estimates that are extreme relative to industry norms.

What gain or loss have you made : At the expiry date in March 2013, Ken stock trades at 8.50. What gain or loss have you made? (Ignore interest carrying costs).

What techniques does he use to recreate the past : What techniques does he use to recreate the past and what does his writing convey about the role of the Church and the social tensions that existed during

Identify the five broad categories of toxins : Identify the five broad categories of toxins, and then provide an example of each that is found in the region where you live.

What is the alpha for the fad followers : Assume that the economy has three types of people. 20% are fad followers, 75% are passive investors, What is the alpha for the fad followers?

What experience do you have : Please comment on why you think each question is important to ask Certified financial planner (CFP).

How did the pollutant affect the environment : Discuss a specific environmental pollutant that has had a negative effect on the environment. How did the pollutant affect the environment?

What must the expected return on stock : What must the expected return on this stock be if stock has a beta of 0.85, the expected return on the market is 10 percent, and the risk-free rate is 6 percent

What constant rate is stock expected to grow after year : At what constant rate is the stock expected to grow after Year 3?

User Account

All Pages