Asset a Has an Expected Return of 22% and a Beta

question 263

Multiple Choice

Asset A has an expected return of 22% and a beta of 1.8. The expected market return is 14%. What is the risk-free rate?

• A) 0.6%
• B) 1.2%
• C) 3.0%
• D) 4.0%
• E) 6.0%

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Definitions:

Nonprogrammed Decision

Decisions made in response to situations that are unique, poorly defined, and largely unstructured.

Standard Operating Procedure

A set of written instructions that document a routine or repetitive activity followed by an organization.

Routine Servicing

Regular maintenance or checks to ensure that systems, machines, or vehicles are operating efficiently and safely.

Solution Implementation

The process of executing a plan or method to solve a problem or address a specific need.