Question

You are evaluating a fund that had an annual average return of 7.2%. During that time, the average risk-free rate was 1.5% and the average market return was 8%. If the fund's beta is 0.8, what was its alpha? Answer in percent, rounded to one decimal place (e.g. 4.32% = 4.3).

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

ke - Microsoft Excel (Product Activation Failed) Add-Ins Formulas Data Review View - 2x Σ AutoSum : A 11 A = = V General File Home Insert Page Layout % Cut Calibri Ea Copy Paste B I U D Format Painter Clipboard Font A A = E Wrap Text Merge Merge & Center Center SF 4:0 .00 8. Insert Delete Format $ - % % Number Conditional Format Formatting as Table Styles Cell Styles Fill 2 Clear Sort & Filter Editing Find & Select Alignment Cells EA60 DZ EA EB ECED EE EF EG EH EL EJ E K ЕМЯ 2 47 48 49 50 CAPM APPROACH REQUIRED RETURN = Rf + beta*(Rm-Rf) REQUIRED RETURN = 1.5% +0.8*(8%-1.5%) REQUIRED RETURN = 6.70% 51 52 53 54 55 ALPHA = EXPECTED RETURN - REQUIRED RETURN ALPHA= 7.2% -6.70% ANSWER ALPHA = 0.5% 56 57 58 59 60 61 62 63 64 65 HON Rea convexity DGM beta port future INDEX INTL CAP BUD SANDRINE LEASING PV, FV, ANNUITY DIR right clean KE CAPM UTILITY, SHARPE, beta ferences RI O 0-_ + YIELD bond portfolio WACC DOI 130% - 9 * * 10 ENG 2. 29-11-2019