UPS, a Delivery Services Company, Has a Beta of 1

question 1

Multiple Choice

UPS, a delivery services company, has a beta of 1.6, and Wal-Mart has a beta of 0.9. The risk-free rate of interest is 6% and the market risk premium is 9%. What is the expected return on a portfolio with 40% of its money in UPS and the balance in Wal-Mart?

• A) 14.96%
• B) 15.79%
• C) 16.62%
• D) 18.28%

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