What is the expected return for Asset X if it has a beta of 1.5, the expected market return is 15 percent, and the expected risk-free rate is 5 percent?
A) 5.0%
B) 7.5%
C) 15.0%
D) 20.0%

Question

Quizplus · Accepted Answer

The expected return for Asset X 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 given values: Expected Return = 5% + 1.5 * (15% - 5%) = 5% + 1.5 * 10% = 5% + 15% = 20%.

What Is the Expected Return for Asset X If It