If the ICAPM Beta Is 1 $12.0\%$ B) $14.8 \%$

question 22

Multiple Choice

If the ICAPM beta is 1.2,and the world market return and risk-free rates are 14% and 6% respectively,then the expected return predicted by the ICAPM is:

• A) \( 12.0\% \)
• B) \( 14.8 \% \)
• C) \( 15.6 \% \)
• D) \( 16.4 \% \)

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Definitions:

Short 150 Shares

The action of borrowing 150 shares of a stock with the aim of selling them in the hope that the stock price will decline, allowing for profit upon repurchasing the shares at a lower price.

Initial Margin

The portion of the purchase price that an investor must deposit when buying securities on margin, serving as a form of collateral.

Initial Investment

The amount of money used to start a business venture, acquire an asset, or invest in a financial product.

Short 100 Shares

The selling of 100 shares that are not currently owned, with the expectation of buying them back at a lower price for a profit.