If the Risk-Free Rate Is 7 Percent, the Expected Return

question 73

Multiple Choice

If the risk-free rate is 7 percent, the expected return on the market is 10 percent, and the expected return on Security J is 13 percent, what is the beta of Security J?

• A)1.0
• B)1.5
• C)2.0
• D)2.5
• E)3.0

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Definitions:

Numbers

Mathematical objects used to count, measure, and label.

Coherence Theory

A theory in epistemology and philosophy asserting that truth consists of the coherence of ideas or propositions with a system of belief or knowledge.

Pragmatic Theory

A theory in philosophy that evaluates theories or beliefs in terms of the success of their practical application.

Correspondence Theory

A theory in epistemology and philosophy of truth stating that the accuracy of a statement is determined by how accurately it corresponds to the real world or facts.