An Investor Has $5,000 Invested in a Stock Which Has

question 65

Multiple Choice

An investor has $5,000 invested in a stock which has an estimated beta of 1.2, and another $15,000 invested in the stock of the company for which she works. The risk-free rate is 6 percent and the market risk premium is also 6 percent. The investor calculates that the required rate of return on her total ($20,000) portfolio is 15 percent. What is the beta of the company for which she works?

• A) 1.6
• B) 1.7
• C) 1.8
• D) 1.9
• E) 2.0

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