Asset Y Has a Beta of 1

question 56

Multiple Choice

Asset Y has a beta of 1.2. The riskfree rate of return is 6 percent, while the return on the market portfolio of assets is 12 percent. The asset's market risk premium is

• A) 10 percent.
• B) 6.0 percent.
• C) 7.2 percent.
• D) 13.2 percent.

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Definitions:

Non-Normal Procedures

Statistical methods that do not assume the normal distribution of the data and are used for analysis.

One-sample T Statistic

A statistical measure used to test the hypothesis about the mean of a normally distributed population when the population variance is unknown, based on a sample.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how spread out the values in a data set are.

Normal Distribution

A continuous probability distribution that is symmetrical around the mean, showing that data close to the mean are more frequent in occurrence than data far from the mean.