Use the Information for the Question(s)below

question 15

Multiple Choice

Use the information for the question(s) below.
Suppose that the risk-free rate is 5% and the market portfolio has an expected return of 13% with a volatility of 18%.Monsters Inc.has a 24% volatility and a correlation with the market of .60,while California Gold Mining has a 32% volatility and a correlation with the market of -.7.Assume the CAPM assumptions hold.
-California Gold Mining's required return is closest to:

• A)-5%.
• B)13%.
• C)15%.
• D)5%.

---

Definitions:

Stereotype

A fixed, oversimplified image or idea of a particular type of person or thing, often based on limited information and used to categorize individuals or groups.

Expected Value

A calculated average outcome of a probabilistic event, quantifying the expectation of an event's outcome as a single numerical value.

Lottery Ticket

A slip of paper or digital token used in a lottery game where players select numbers or symbols hoping to match a draw for monetary or other prizes.

Structuring Decision

Involves organizing and prioritizing decision-making factors and criteria to make complex decisions more manageable.