Asset Y Has a Beta of 1

question 102

Multiple Choice

Asset Y has a beta of 1.2.The risk-free rate of return is 6 percent,while the return on the market portfolio of assets is 12 percent.The market risk premium is ________.

• A)7.2 percent
• B)6.0 percent
• C)13.2 percent
• D)10 percent

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Definitions:

Recessionary Gap

A condition in macroeconomics when an economy's real GDP is lower than its potential GDP, leading to unemployment and underutilized resources.

Increase Production

A situation where a company or country grows its capability to produce goods or services, often in response to higher demand or improved efficiency.

Marginal Costs

The additional cost incurred from producing one more unit of a good or service.

Aggregate Supply Curve

The aggregate supply curve represents the total output of goods and services that firms in an economy are willing and able to produce at different price levels, holding all else constant.