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:

Collectivism

A societal orientation that emphasizes the group over individual interests and values interpersonal relationships.

Community Information

Data or knowledge about a specific group of people that shares a common interest or location.

Theory Of Mind

Describes the ability to attribute mental states—beliefs, intents, desires, emotions, knowledge—to oneself and to others, and understand that others have beliefs and perspectives different from one's own.

False Belief

An erroneous understanding or conviction about something that does not align with factual reality.