Given the Capital Asset Pricing Model, a Security with a Beta

question 19

Multiple Choice

Given the capital asset pricing model, a security with a beta of 1.5 should return ________, if the risk-free rate is 3% and the market return is 11%.

• A) 16.5%
• B) 14.0%
• C) 14.5%
• D) 15.0%

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Definitions:

Imposing Resolution

Enforcing a solution or settlement onto the parties involved in a dispute, often without their voluntary agreement.

Narcotic Effect

The numbing or desensitizing impact of an activity or substance over time, reducing its perceived effects.

Frequency of Arbitration

The rate or occurrence at which arbitration, a form of dispute resolution involving an impartial third party, is used to settle disputes.

Binding Decision

A final and enforceable decision made by an authority such as a court or arbitrator, from which parties cannot deviate.