Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. assume that the economy has three types of people.

Assume that the economy has three types of people. 20% are fad followers, 70% are passive...

50.1K

Verified Solution

Question

Finance

Assume that the economy has three types of people. 20% are fadfollowers, 70% are passive investors, and 10% are informed traders.The portfolio consisting of all informed traders has a beta of 1.2and an alpha of 4.55%. The market has an expected return of 9% andthe risk-free rate is 3%. 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).

Answer & Explanation Solved by verified expert
4.1 Ratings (577 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Assume that the economy has three types of people. 20% are fadfollowers, 70% are passive investors, and 10% are informed traders.The portfolio consisting of all informed traders has a beta of 1.2and an alpha of 4.55%. The market has an expected return of 9% andthe risk-free rate is 3%. 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).

Other questions asked by students

Q

Describe the three major renal processes: glomerular filtration, tubular reabsorption, and tubular secretion. Include where they occur...

Medical Sciences
Q

Post a 1- to 2-paragraph analysis of a graph from the news media. Your posting should...

Advance Math
Q

The fixed form of nitrogen ammonium ion and ammonia can be oxidized for energy by...

Biology
Q

It is sufficiently long so that water rises to maximum height h in the tube...

Physics
Q

How many degrees is radians 12 O 30 degrees O 100 degrees O 120 degrees...

Geometry
Q

What are the odds in favor of drawing a five from an ordinary deck of...

Basic Math
Q

Paul Harrid, president of Crane Always, agrees to construct a concrete cart path at...

Accounting
Q

Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2021 and 2020...

Accounting
Q

plz help Dividends and interest receivable would be classified as notes receivable....

Accounting
Q

The volatility of a non-dividend-paying stock whose price is $80 is 40%. The risk-free rate...

Finance
Q

Crane Bucket Co, a manufacturer of rain barrels had the following data for 2022. Sales...

Accounting
Q

A British financial institution has written 1,900 call options and written 2,800 put options on...

Finance