UPS, a Delivery Services Company, Has a Beta of 1

question 67

Multiple Choice

UPS, a delivery services company, has a beta of 1.4, and Wal-Mart has a beta of 0.9. The risk-free rate of interest is 4% and the market risk premium is 6%. What is the expected return on a portfolio with 50% of its money in UPS and the balance in Wal-Mart?

• A) 10.9%
• B) 10.4%
• C) 12.0%
• D) 13.1%

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Definitions:

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Working Refrigerator

A refrigerator that is functioning properly, effectively cooling and preserving food items.

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