Question: Problem-solving: Calculate the capital asset pricing model's required return (k) and Jensen's measure of excess return, alpha, for the following investment projects, then rank-order them from best to worst. Assume that the risk-free return, if, is 6% and the market return, im = 12%.
Project beta Expected Return
A 1.0 14%
B 1.2 20%
C 1.6 30%
D 0.8 10%