The Risk-Free Rate of Return Is 4% and the Market

question 95

Multiple Choice

The risk-free rate of return is 4% and the market risk premium is 8%.What is the expected rate of return on a share with a beta of 1.28?

• A)9.12%
• B)10.24%
• C)13.12%
• D)14.24%
• E)15.36%

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Definitions:

Assumption

A basic premise or belief that is accepted as true without proof, often used as a starting point for further argument or analysis.

Simplify

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Special Cases

Special Cases refer to unique or extraordinary scenarios in economics that require specific attention or deviate from the norm due to unusual circumstances or factors.

Scientific Method

A systematic approach to research and inquiry where problems are identified, hypotheses formulated, experiments conducted, and conclusions drawn.