The Expected Return on HiLo Stock Is 14

question 16

Multiple Choice

The expected return on HiLo stock is 14.08 percent while the expected return on the market is 11.5 percent.The beta of HiLo is 1.26.What is the risk-free rate of return?

• A).41 percent
• B)2.01 percent
• C).69 percent
• D)1.58 percent
• E)1.62 percent

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Definitions:

Interest Rate

A percentage that represents the cost of borrowing money or the profit earned from an investment.

Equivalent Interest

An interest rate or yield that is calculated to be comparable across different compounding periods or payment schedules.

Nearest 0.01%

This refers to rounding calculations to the closest hundredth of a percent, commonly used for precision in interest rates and financial metrics.

Nearest 0.01%

Rounding or approximating a numerical value to the closest hundredth of a percent.