A Stock Has a Beta of 1

question 92

Multiple Choice

A stock has a beta of 1.10, an expected return of 12.11 percent, and lies on the security market line.A risk-free asset is yielding 3.2 percent.You want to create a portfolio valued at $12,000 consisting of Stock A and the risk-free security such that the portfolio beta is .80.What rate of return should you expect to earn on your portfolio?

• A)9.68 percent
• B)9.16 percent
• C)9.33 percent
• D)9.41 percent
• E)9.56 percent

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