The Risk-Free Rate and the Expected Market Rate of Return

question 80

Multiple Choice

The risk-free rate and the expected market rate of return are 6% and 16%, respectively. According to the capital asset pricing model, the expected rate of return on security X with a beta of 1.2 is equal to ________.

• A) 12%
• B) 17%
• C) 18%
• D) 23%