The risk-free rate is 7 percent,the expected return on the market is 10 percent,and the expected return on Security J is 13 percent.What is the beta of Security J?
A) 0.5
B) 1.0
C) 1.5
D) 2.0
E) 2.5

Question

Quizplus · Accepted Answer

Rearrange the CAPM equation to solve for beta. E(k_i) = k_F + β_i[E(k_M) - k_F] β_i = 11ea7fdb_fc0d_3220_a768_15ed2e952ff8_TB2902_11 β_i = 11ea7fdb_fc0d_3221_a768_6d647c9a7ca3_TB2902_11 = 11ea7fdb_fc0d_3222_a768_499db78088dd_TB2902_11 = 2

The Risk-Free Rate Is 7 Percent,the Expected Return on the Market