Both Assets a and B Plot on the SML

question 80

Multiple Choice

Both assets A and B plot on the SML.Asset A has an expected return of 15% and a beta of 1.7.Asset B has an expected return of 12% and a beta of 1.1.What is the risk-free rate of return?

• A)5.0%
• B)6.5%
• C)11.5%
• D)It cannot be determined from this information.

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Definitions:

Taxable Estate

The total value of an individual's estate that is considered when determining estate taxes, including all assets minus allowable deductions.

Alpha Stock

Typically refers to securities that are expected to outperform the market or their sector, based on investment analysis.

Funeral Expenses

Costs associated with burial or cremation and related services, often considered in estate planning and asset distribution.

Executor

An individual or institution appointed to execute the terms of a will, managing the estate of the deceased according to the will's instructions.