Asset A has an expected return of 15%. The expected market return is 14% and the risk-free rate is 4%. What is asset A's beta?
A) 0.80
B) 1.10
C) 1.40
D) 1.80
E) 2.00

Question

Quizplus · Accepted Answer

Asset A's beta can be calculated using the Capital Asset Pricing Model (CAPM) formula: Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Plugging in the values: 15% = 4% + Beta * (14% - 4%), solving for Beta gives 1.10.

Asset a Has an Expected Return of 15