What Is the Expected Return for Asset X If It

question 89

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:

Owners

Individuals or entities that hold the ownership interest in a company, entitling them to the residual profits and assets after liabilities are settled.

Corporation's Charter

A legal document that establishes a corporation, outlining its structure, operations, and objectives, issued by a governmental or other authorized entity.

Articles of Incorporation

Official papers submitted to a government agency for the purpose of officially registering the formation of a corporation.

Mutual Agency

Act of a single partner is binding on all members of the partnership.