What Is the Expected Return for Asset X If It

question 147

Multiple Choice

What is the expected return for Asset X if it has a beta of 1.5, the expected market return is 15 percent, and the expected risk-free rate is 5 percent?

• A) 5.0%
• B) 7.5%
• C) 15.0%
• D) 20.0%

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Definitions:

Average Total Cost

Average total cost is the total cost of production divided by the total quantity produced, representing the cost per unit of output.

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating surplus beyond the normal profit level.

Demand Curves

Graphical representations that show the relationship between the price of a good or service and the quantity demanded by consumers.

Industry Entry

The process by which new competitors join an industry, often bringing innovation or increased competition.