The Risk-Free Rate and the Expected Market Rate of Return

question 77

Multiple Choice

The risk-free rate and the expected market rate of return are 0.05 and 0.13, respectively. According to the capital asset pricing model (CAPM) , the expected rate of return on a security with a beta of 1.1 is equal to

• A) 13.8%
• B) 14.4%
• C) 15.3%
• D) 13.4%
• E) 11.7%

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Definitions:

Psychoanalysis

A therapeutic approach and theory of psychology developed by Sigmund Freud, focusing on unconscious motives and conflicts.

Token Economy

A behavioral modification technique where desired behaviors are reinforced with tokens that can be exchanged for rewards.

Self-defeating Ideas

Thoughts or beliefs that undermine a person's success, happiness, or ability to meet their goals.

Cognitive Therapy

A structured, goal-oriented type of psychotherapy focused on identifying and correcting distorted thinking patterns, emotional responses, and behaviors.