Assume That the Market Is in Equilibrium and That Stock

question 11

Multiple Choice

Assume that the market is in equilibrium and that stock betas can be estimated with historical data.The returns on the market,the returns on United Fund (UF) ,the risk-free rate,and the required return on the United Fund are shown below.Based on this information,what is the required return on the market,r_M? $\begin{array} { c c r } \text { Year } & \text { Market } & \text { UF } \\ 2011 & - 9 \% & - 14 \% \\ 2012 & 11 \% & 16 \% \\ 2013 & 15 \% & 22 \% \\ 2014 & 5 \% & 7 \% \\ 2015 & - 1 \% & - 2 \% \end{array}$
tRF: $7.00 \%$ $\quad$ $\quad$ IUnited $15.00 \%$

• A)10.57%
• B)11.13%
• C)11.72%
• D)12.33%
• E)12.95%

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Definitions:

Peak Intensity

A measure of the strength or amplitude of a peak in a spectrum, indicating the relative quantity of the analyte present.

IR Spectrometer

An instrument used to measure the infrared light absorbance or transmittance of a substance, providing information about molecular vibrations.

Infrared Wavelength

Electromagnetic radiation wavelengths longer than visible light but shorter than microwaves, used in heating, remote controls, and night vision.

Wavenumber

A measure of the number of wave cycles per unit of distance, typically used in spectroscopy.