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

question 19

Multiple Choice

The risk-free rate and the expected market rate of return are 0.06 and 0.12, respectively. According to the capital asset pricing model (CAPM) , the expected rate of return on security X with a beta of 1.2 is equal to

• A) 0.06.
• B) 0.144.
• C) 0.12.
• D) 0.132.
• E) 0.18.

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Definitions:

Epithelial

Pertaining to or characterized by the epithelium, the protective tissue layer of the body and organs.

UV Light Exposure

Refers to the exposure of objects or living organisms to ultraviolet light, which can have various effects such as skin damage or sterilization.

Collagen

Collagen is a protein that is the main component of connective tissues in animals, providing strength, elasticity, and structure to skin, bones, and tendons.

Elastin

A highly flexible protein found in connective tissue, enabling various bodily tissues to revert to their original form after being stretched or contracted.