What Is the Expected Market Return If the Expected Return

question 134

Multiple Choice

What is the expected market return if the expected return on Asset X is 20 percent, its beta is 1.5, and the risk free rate is 5 percent?

• A) 5.0%
• B) 7.5%
• C) 15.0%
• D) 22.5%

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Definitions:

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the net worth of the company to its shareholders.

Stock Split

An action by a company to divide its existing shares into multiple new shares to boost the stock's liquidity, although the overall value of the company remains unchanged.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.