The Reward-To-Risk Ratio Is 6

question 63

Multiple Choice

The reward-to-risk ratio is 6.0% and the risk-free rate is 1.4%. What is the expected return on a risky asset if the beta of that asset is 1.30?

• A)8.23%
• B)8.40%
• C)9.20%
• D)10.23%
• E)11.30%

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Definitions:

Selling Price

The amount for which a product or service is sold to customers.

Paid-in Capital

Funds received by a company from equity investors in exchange for stock, representing the capital staked by shareholders in the company.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, removing them from the market.

Common Stock

A form of corporate equity ownership, a type of security representing ownership in a corporation.