In the CAPM, a Stock Has a Beta Coefficient of 0.1.The

question 15

Multiple Choice

In the CAPM, a stock has a beta coefficient of 0.1.The average returns to all stocks in the market is 10%.If the interest rate on three-month T-bills is at around 2 percent, what is the expected return to this stock? Assume that unsystematic risk is zero.

• A)2.5 percent
• B)5.0 percent
• C)7.5 percent
• D)10.0 percent

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