Asset P Has a Beta of 0

question 132

Multiple Choice

Asset P has a beta of 0.9. The risk-free rate of return is 8 percent, while the return on the market portfolio of assets is 14 percent. The asset's required rate of return is

• A) 13.4 percent.
• B) 6.0 percent.
• C) 5.4 percent.
• D) 10 percent.

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Definitions:

Initial Endowment

The initial allocation of assets, income, or resources that an individual, institution, or country possesses.

Min

The smallest or least possible amount, quantity, value, or degree.

Pareto Optimal Allocation

A distribution of resources in which it is impossible to make any individual better off without making at least one individual worse off.

Endowed

Provided with a large amount of a resource or quality, often referring to financial grants given to institutions or individuals.