What Is the Expected Yield on the Market Portfolio at a Time

question 22

Multiple Choice

What is the expected yield on the market portfolio at a time when Treasury bills yield 6% and a stock with a Beta of 1.4 is expected to yield 18%?

• A)8.6%
• B)10.8%
• C)12.0%
• D)14.6%

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Definitions:

Income Tax Expense

The cost of income taxes a company is obligated to pay to governmental authorities, reflected in its financial statements.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value.

Statement of Financial Position

A financial statement that shows an entity's assets, liabilities, and equity at a specific point in time, providing a snapshot of its financial condition.

Disclosed and Reconciled

The process in which financial activities are explained in detail and discrepancies between different accounts or reports are resolved.