Asset a Has an Expected Return of 12% and a Beta

question 214

Multiple Choice

Asset A has an expected return of 12% and a beta of 1.05. The risk-free rate is 4%. What is the market risk premium?

• A) 7.6%
• B) 8.2%
• C) 9.6%
• D) 10.2%
• E) 11.6%

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Definitions:

Decentralised Authority

A system of governance in which decision-making powers are distributed away from a central authority to smaller, localized entities.

Divisional Structure

An organizational framework divided into semi-autonomous units or divisions based on product, service, market, or geography.

Similar Customers

Individuals or organizations with comparable needs, interests, or characteristics, targeted by businesses offering tailored products or services.

Geographic Region

An area defined by natural or artificial boundaries characterized by specific physical, economic, cultural, or political conditions.