A Risky Asset Has a Beta of

question 40

Multiple Choice

A risky asset has a beta of .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:

Real Value

The value of an object or service adjusted for inflation, representing its purchasing power.

Nominal Value

The face value of a financial instrument or an item's price in terms of money, without adjustment for inflation or other factors.

Price Level

The ongoing average price for the economy's produced goods and services.

Consumer Price Index

An indicator that calculates the weighted mean of the cost of a collection of consumer products and services, including transportation, food, and healthcare, employed to gauge inflation rates.