A risky asset has a beta of 1.40 and an expected return of 17.6 percent.What is the risk-free rate if the risk-to-reward ratio is 8.4 percent?
A) 2.74 percent
B) 4.03 percent
C) 4.33 percent
D) 5.32 percent
E) 5.84 percent

Name: A risky asset has a beta of 1.40 and an expected return of 17.6 percent.What is the risk-free rate if the risk-to-reward ratio is 8.4 percent? A) 2.74 percent B) 4.03 percent C) 4.33 percent D) 5.32 percent E) 5.84 percent
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Question

Quizplus · Accepted Answer

8.4 = (17.6 − r_f)/1.40; r_f = 5.84%

A Risky Asset Has a Beta of 1