The market has an expected return of 11.3% and a risky asset with a beta of 1.18 has an expected return of 13%. Based on this information, what is the pure time value of money?
A)1.86%
B)1.90%
C)2.38%
D)2.51%
E)2.90%

Question

Quizplus · Accepted Answer

The pure time value of money is the expected return on a risk-free asset. Since the market has an expected return of 11.3%, and the risky asset has an expected return of 13%, the pure time value of money is 11.3%.

The Market Has an Expected Return of 11