Asset Y Has a Beta of 1

question 19

Multiple Choice

Asset Y has a beta of 1.2. The risk- free rate of return is 6%, while the return on the market portfolio of assets is 12%. The asset's market risk premium is

• A) 10 %
• B) 6.0%
• C) 7.2%
• D) 13.2%

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Definitions:

Adaptive Responses

Reactions or changes made by organisms in response to changes in their environment or internal state that are beneficial for survival and reproduction.

Taste Aversion

A learned response to eating a particular food that results in an aversion to it, often following an illness or bad experience associated with the food.

Innate Releasing Mechanism

A hypothetical mechanism in the brain that responds to specific sensory stimuli by triggering a fixed action pattern or innate behavior.

Learned Taste Aversion

Learned taste aversion is a psychological phenomenon where an individual develops a strong aversion to a food or substance after associating it with illness or discomfort.