The Risk-Free Rate Is 5%, and the Expected Return on the Market

question 6

Multiple Choice

The risk-free rate is 5%, and the expected return on the market is 13%. A publicly-traded bond promises a rate of return of 9%; the expected return on this bond is 8%. What is the
Bond's implied beta?

• A)2.667
• B)0.375
• C)3.000
• D)0.500

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Definitions:

Frontal Sinus

Air-filled cavities in the skull, located above the eyes within the frontal bone, which lighten the skull and resonate the voice.

Ethmoidal Sinus

Air-filled spaces located within the ethmoid bone between the nose and eyes, part of the paranasal sinuses.

Maxillary Sinus

The maxillary sinus is one of the four pairs of paranasal sinuses that are located within the bones of the face and cheeks, specifically within the maxilla or upper jaw bone.

Lordosis

A curvature of the spine that results in an exaggerated inward curve of the lower back.