Currently, the expected return on the market is 12.5% and the required rate of return for Alpha, Inc. is 12.5%. Therefore, Alpha's beta must be
A) less than 1.0.
B) greater than 1.0.
C) equal to 1.0.
D) unknown based on the information provided.

Question

Quizplus · Accepted Answer

Since the required rate of return for Alpha, Inc. is equal to the expected return on the market, it means that Alpha's beta is equal to 1.0 (which is the market beta).

Currently, the Expected Return on the Market Is 12