A Risky Asset Has a Beta of 0

question 81

Multiple Choice

A risky asset has a beta of 0.90 and an expected return of 7.4 percent.What is the reward-to-risk ratio if the risk-free rate is 2.69 percent?

• A) 4.04 percent
• B) 5.23 percent
• C) 6.51 percent
• D) 8.41 percent
• E) 11.59 percent

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Definitions:

Sensation

The response of a sensory organ (eyes, ears, skin, tongue, nose) when it detects a stimulus.

Perception

The mental processing of sensory information when the brain interprets a sensation.

Cognition

The mental action or process of acquiring knowledge and understanding through thought, experience, and the senses, encompassing processes such as memory, judgment, and problem-solving.

Prefrontal Cortex

A region of the frontal lobes of the brain implicated in a variety of complex behaviors, including planning, decision-making, and moderating social behavior.