The expected return on HiLo stock is 12.04 percent while the expected return on the market is 10.52 percent.The beta of HiLo is 1.28.What is the risk-free rate of return?
A)5.09%
B)3.2%
C)3.7%
D)4.2%
E)4.87%

Name: The expected return on HiLo stock is 12.04 percent while the expected return on the market is 10.52 percent.The beta of HiLo is 1.28.What is the risk-free rate of return? A)5.09% B)3.2% C)3.7% D)4.2% E)4.87%
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Question

Quizplus · Accepted Answer

E(r)= .1204 = R_f + 1.28 × (.1052 - R_f)R_f = .0509,or 5.09%

The Expected Return on HiLo Stock Is 12