Anchor Incorporated has a beta of 1.0.If the expected return on the market is 15%,what is the expected return on Anchor Incorporated's stock?
A) 15%
B) 14%
C) 18%
D) cannot be determined without the risk-free rate

Question

Quizplus · Accepted Answer

A beta of 1.0 means that the stock's returns are expected to move in line with the market. Therefore, if the expected return on the market is 15%, the expected return on Anchor Incorporated's stock would also be 15%.

Anchor Incorporated Has a Beta of 1