The Return on the Market Portfolio Is Currently 12

question 15

Multiple Choice

The return on the market portfolio is currently 12%.Mobile Phone Corporation stockholders require a rate of return of 30% and the stock has a beta of 3.2.According to CAPM,determine the risk-free rate.

• A) 9.80%
• B) 6.50%
• C) 4.64%
• D) 3.82%

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Definitions:

Interaction

A process by which two or more entities or phenomena act upon each other or engage with each other.

Correspondence Principle

The principle whereby the structures of workplaces are reflected in the structures of schools.

Bowles and Gintis

Two economists known for their work on the correspondence theory, examining the relationship between education and the economy.

Social Class Mobility

The ability for individuals or groups to move within or between social hierarchies in a society.