EBK INVESTMENTS
EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 24, Problem 15PS

A

Summary Introduction

To calculate: The value of alpha on the basis of manager’s portfolio. When the T-bill rate was 6%, market return was 14% and portfolio manager with beta of 0.5 having return of 10%.

Introduction: The value of alpha depends on the value of beta, T-bill return, and market return value.

B

Summary Introduction

To explain: Effect of the alpha value on the performance of portfolio when the security market line is too flat.

Introduction: When it comes to performance analysis, then beta value gives a high imact on performance.

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