Green Company Stock Has a Beta of 2 and a Required

question 132

Multiple Choice

Green Company stock has a beta of 2 and a required return of 23%,while Gold Company stock has a beta of 1.0 and a required return of 14%.The standard deviation of returns for Green Company is 10% more than the standard deviation for Gold Company.The expected return on the market portfolio according to the CAPM is

• A) 9%.
• B) 10%.
• C) 12%.
• D) 14%.

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