The Expected Return on HiLo Stock Is 13

question 64

Multiple Choice

The expected return on HiLo stock is 13.69% while the expected return on the market is 11.5%. The beta of HiLo is 1.3. What is the risk-free rate of return?

• A) 2.8%
• B) 3.1%
• C) 3.7%
• D) 4.2%
• E) 4.5%

---

Definitions:

Total Costs

The sum of all expenses a firm incurs in the production of goods or services, including both fixed and variable costs.

Market System

A financial framework where the choices about investment, production, and allocation are directed by the price indicators generated through the dynamics of supply and demand.

Government Ownership

This refers to enterprises or assets owned by the government or public authorities, rather than by private individuals or companies.

Private Property

Owned assets or possessions that are legally recognized and protected, excluding those owned by government entities.