Consider the data on expected returns and betas for a variety of assets in the table below. What is the expected return on shares of Bank of America using the SML? $$\begin{array} { | c | c | c | }
\hline \text { Asset } & \begin{array} { c }
\text { Expected } \
\text { Return }
\end{array} & \text { Beta } \
\hline \begin{array} { c }
\text { Bank of } \
\text { America }
\end{array} & & 0.9 \
\hline \text { Risk Free Asset } & 4 \% & 0 \
\hline \begin{array} { c }
\text { Market } \
\text { Portfolio }
\end{array} & 10 \% & 1 \
\hline
\end{array}$$
A)5.4%
B)6.0%
C)8.2%
D)9.4%
E)11.2%

Question

Consider the data on expected returns and betas for a variety of assets in the table below. What is the expected return on shares of Bank of America using the SML? $$\begin{array} { | c | c | c | } 
\hline \text { Asset } & \begin{array} { c } 
\text { Expected } \
\text { Return }
\end{array} & \text { Beta } \
\hline \begin{array} { c } 
\text { Bank of } \
\text { America }
\end{array} & & 0.9 \
\hline \text { Risk Free Asset } & 4 \% & 0 \
\hline \begin{array} { c } 
\text { Market } \
\text { Portfolio }
\end{array} & 10 \% & 1 \
\hline
\end{array}$$
A)5.4%
B)6.0%
C)8.2%
D)9.4%
E)11.2%

Quizplus · Accepted Answer

The Answer of Consider the data on expected returns and betas for a variety of assets in the table below. What is the expected return on shares of Bank of America using the SML? $$\begin{array} { | c | c | c | } 
\hline \text { Asset } & \begin{array} { c } 
\text { Expected } \
\text { Return }
\end{array} & \text { Beta } \
\hline \begin{array} { c } 
\text { Bank of } \
\text { America }
\end{array} & & 0.9 \
\hline \text { Risk Free Asset } & 4 \% & 0 \
\hline \begin{array} { c } 
\text { Market } \
\text { Portfolio }
\end{array} & 10 \% & 1 \
\hline
\end{array}$$
A)5.4%
B)6.0%
C)8.2%
D)9.4%
E)11.2%

Consider the Data on Expected Returns and Betas for a Variety