The Stock of Alpha Company Has an Expected Return of 18

question 27

Multiple Choice

The stock of Alpha Company has an expected return of 18% and a beta of 1.5,and Gamma Company stock has an expected return of 15.6% and a beta of 1.2.Assume the CAPM holds.What's the risk-free rate?

• A) 8.0%
• B) 6.0%
• C) 0%
• D) 4.7%