The equilibrium expected return on an asset is 14%,the risk-free rate is 4% and the return on the market portfolio is 12%.What is the beta of the asset?
A) 1.10
B) 1.15
C) 1.20
D) 1.25
E) 1.30

Question

Quizplus · Accepted Answer

E(k_i) = k_F + β_i[E(k_M) - k_F] β_i = 11ea7fdb_fc0d_0b0a_a768_559d39a1cd35_TB2902_11 β_i = 11ea7fdb_fc0d_0b0b_a768_ed9da6d37355_TB2902_11 = 11ea7fdb_fc0d_0b0c_a768_035b4e0bbde2_TB2902_11 = 1.25

The Equilibrium Expected Return on an Asset Is 14%,the Risk-Free