A Risky Asset Has a Beta of 1

question 4

Multiple Choice

A risky asset has a beta of 1.40 and an expected return of 17.6%. What is the risk-free rate if the risk-to-reward ratio is 8.4%?

• A)2.74%
• B)4.03%
• C)4.33%
• D)5.32%
• E)5.84%

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Definitions:

Welfare Eligibility

Criteria that determine an individual's or family's qualification to receive assistance or benefits from governmental social welfare programs.

MSC Curve

The Marginal Social Cost curve, illustrating the total cost to society of producing one additional unit of a good.

Emissions

The release of pollutants or greenhouse gases into the atmosphere, often associated with industrial processes or vehicle exhaust.

Technologies

The application of scientific knowledge for practical purposes, especially in industry.