The Risk-Free Rate and the Expected Market Rate of Return

question 18

Multiple Choice

The risk-free rate and the expected market rate of return are 0.056 and 0.125, respectively. According to the capital asset pricing model (CAPM) , the expected rate of return on a security with a beta of 1.25 is equal to

• A) 0.142.
• B) 0.144.
• C) 0.153.
• D) 0.134.
• E) 0.117.

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Definitions:

Quartering Act

refers to laws passed by the British Parliament requiring American colonies to provide housing and accommodations for British troops, notably leading up to the American Revolutionary War.

British Soldiers

Members of the United Kingdom's military forces, especially those serving during historical conflicts or colonial administration.

Soldiers' Presence

The state of military personnel being stationed in a particular location or area, which can influence local dynamics and security.

Boston Massacre

A clash between British soldiers and Boston colonists in 1770, where five colonists were killed, marking a critical point leading to the American Revolution.