The Returns on the Market, the Returns on United Fund

question 10

Multiple Choice

The returns on the market, the returns on United Fund (UF) , the risk-free rate, and the required return on the United Fund are shown below. Assuming the market is in equilibrium and that beta can be estimated with historical data, what is the required return on the market, rM?rRF: 7.00%; rUnited: 15.00%

• A) 10.57%
• B) 11.13%
• C) 11.72%
• D) 12.33%
• E) 12.95%