Stock XYZ Has a Beta of 1

question 84

Multiple Choice

Stock XYZ has a beta of 1.2 and an expected return of 14%; the risk-free asset (T-bills) currentlyearns 4%. What is the expected return on a portfolio if 50% of your money is invested in Stock XYZand 50% in T-bills?

• A) 8%
• B) 18%
• C) 9%
• D) 14%

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Definitions:

Income

The monetary payment received for goods or services, or the earnings from investment capital.

United States

A country in North America, consisting of 50 states and a federal district, known for its significant influence on global politics, economy, and culture.

Perfectly Competitive

A market structure characterized by a large number of buyers and sellers, where no single entity has the power to influence the market price.

Equilibrium Wage

The wage rate at which the quantity of labor demanded equals the quantity of labor supplied.