Use the Information for the Question(s)below

question 124

Multiple Choice

Use the information for the question(s) below.
Suppose that the risk-free rate is 5% and the market portfolio has an expected return of 13% with a volatility of 18%.Monsters Inc.has a 24% volatility and a correlation with the market of .60,while California Gold Mining has a 32% volatility and a correlation with the market of -.7.Assume the CAPM assumptions hold.
-Monsters' required return is closest to:

• A)10.0%.
• B)13.0%.
• C)11.5%.
• D)15.5%.

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Definitions:

Population Mean

The average value of a characteristic in the entire population being studied.

Standard Deviation

A metric indicating the extent of difference or scattering among a series of figures.

Variability

The measure of how much data points in a set diverge from the average or mean value, indicating the spread or dispersion of the dataset.

Standard Deviation

A measure that is used to quantify the amount of variation or dispersion of a set of data values.