What Is the Beta of a Security with an Expected

question 106

Multiple Choice

What is the beta of a security with an expected return of 12% if Treasury bills yield 6% and the market risk premium is 8%?

• A) 0.50
• B) 0.75
• C) 0.90
• D) 1.50

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Definitions:

Anchoring and Adjustment Heuristic

A cognitive bias where individuals rely too heavily on an initial piece of information (the "anchor") when making decisions, adjusting insufficiently from this starting point.

Ethical Criteria

Standards or principles used to determine the rightness or wrongness of an action, often based on moral considerations.

Constituents

Individuals or groups who have a stake in or are affected by an organization's actions, decisions, and policies.

Canons of Justice

Principles or standards that guide fairness and equity in economic distribution, legal practices, and public policy.