Question: If the standard CAPM holds, a security with a high variance of return and a beta of zero should be expected to earn: a. the

If the standard CAPM holds, a security with a high variance of return and a beta of zero should be expected to earn:

a.

the market rate of return
b.

a zero rate of return.
c.

the risk-free rate of return
d.

higher rate of return

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

A company manufacturers a product in the United States and sells it in England. The unit cost of manufacturing is $50. The current exchange rate (dollars per pound) is 1.51. The demand function,...

Q:

6. Which of the following are economic properties of a utility function? i. It must be consistent with the principle of non-satiation ii. It must make some assumption about investors' appetite for...

Q:

Question 34 What is the current price of $1 000 par value bond maturing in 12 years with a coupon rate of 13 per cent, paid semi-annually, that has a YTM of 12 per cent? $1 060 $1 073 $1125 $1 090

Q:

The following data is available about the market portfolio, the riskless rate, and two risky assets, W and X: The market portfolio has a standard deviation equals 13%, stock X has an expected return...

Q:

Use the following information for the next 4 questions (Bonus 4 pts, do this problem only when you are done with the others). Consider a very simple world in which there are only two risky stocks, A...

Q:

Consider a very simple world in which there are only two risky stocks, A and B, and a risk-free asset F. Details for stocks A and B are listed in the following table. Stock Shares outstanding...

Q:

52 Use this information for the following 4 questions. Consider a very simple world in which there are only two risky stocks, A and B, and a risk-free asset F. Details for stocks A and B are listed...

Q:

(Bonus 1 pt, do this problem only when you are done with the others.) Use this information for the following 4 questions. Consider a very simple world in which there are only two risky stocks, A and...

Q:

Consider the following two stocks: Assume the CAPM holds. Based upon the CAPM, what is the return on the market? What is the risk-free rate? Beta Expected Return Murck Pharmaceutical 1.4 25% Pizer...

Q:

Consider the following two stocks: Stock Beta Expected return A 1.4 25% B 0.7 14% Assume the CAPM holds. Based upon the CAPM, what is the return on the market? What is the risk-free rate

Q:

10.28 Consider the following two stocks: Assume the CAPM holds. Based upon the CAPM, what is the return on the market? What is the risk-free rate? Beta Expected Return 25% 0.7 14% Murck...

Q:

The x-component of a velocity vector that has an angle of to the has a magnitude of 4.8 m/s. (a) What is the magnitude of the velocity? (b) What is the magnitude of the y-component of the velocity?

Q:

As in Problem 1-18, state the appropriate economic criterion for each of the following situations. (a) The engineering school held a raffle of an automobile with tickets selling for'50each or three...

Q:

A summons may be used for the following purposes Ascertain correctness of return and determine tax liability Ascertian correctness of the return Determine tax liability Uber eats

Q:

5. Develop a scenario comparing two PH programs and involving the use of a CBA.

Q:

What is the relationship between work related stress and job satisfaction? And between job satisfaction and engagement?

Q:

Is it possible to identify some typologies of inspectors? For example, considering the quotes, to analyse any gender- or age-related themes in relation to work stressors?

Q:

What is re-contextualization and what are the HRM challenges associated with it?