The Risk-Free Rate Is 5% and the Expected Return on the Market

question 2

Multiple Choice

The risk-free rate is 5% and the expected return on the market portfolio is 13%.A stock has a beta of 0,what is its expected return?

• A) 0%
• B) 5%
• C) 13%
• D) none of the above

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Definitions:

Optimum

The most advantageous condition or degree of something, where the best possible outcome is achieved.

Feasible Region

In optimization problems, it is the set of all possible points that satisfy the problem's constraints, representing all possible solutions.

Corner-point Solution

A method in optimization problems, especially linear programming, where the optimal solution is found at the vertex or corner of the feasible region.

Feasible Region

The set of all possible points that satisfy a problem’s constraints, used in optimization to find the best solution.