CSL, a Pharmaceutical Company, Has a Beta of 1

question 19

Multiple Choice

CSL, a pharmaceutical company, has a beta of 1.5, and Woolworths has a beta of 0.9. The risk-free rate of interest is 4% and the market risk premium is 7%. What is the expected return on a portfolio with 30% of its money in CSL and the balance in Woolworths?

• A) 11.23%
• B) 11.07%
• C) 11.56%
• D) 11.98%

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Definitions:

Exponentiation

An operation in mathematics that uses two values, the base and the exponent, with the base being repeatedly multiplied by itself a number of times equal to the exponent.

Exponentiation

A mathematical operation, written as a^b, involving two numbers, the base (a) and the exponent (b), where the base is multiplied by itself the exponent number of times.

Division

The process of assigning or distributing something into separate parts or groups.

Equation Complexity

A measure of the difficulty or intricacy of a mathematical equation, often based on the number of operations or variables involved.