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:

CPI Rose

Refers to an increase in the Consumer Price Index, indicating that the average prices of consumer goods and services have gone up, often a measure of inflation.

$7 Per Hour

A specified wage rate where an individual or worker is paid seven dollars for each hour worked.

Purchasing Power

The economic value of a currency depicted by the number of goods or services obtainable by a single monetary unit.

US$ Per C$

The exchange rate that defines how much one can buy in US dollars (US$) with one Canadian dollar (C$).