A stock's alpha value is calculated as
A)expected return minus required return.
B)required return minus expected return.
C)required return plus expected return.
D)expected return divided by the stock's beta.

Question

Quizplus · Accepted Answer

Alpha value measures the excess return of a stock compared to its expected return based on its beta. It is calculated as the difference between the stock's expected return and the required return adjusted for the stock's beta. Therefore, the correct option is A) expected return minus required return.

A Stock's Alpha Value Is Calculated as