Author Question: Given an expected market return of 12.0, a beta of 0.75 for Benson Industries, and a risk-free rate ... (Read 202 times)

wenmo · **on:** Jul 10, 2018

Given an expected market return of 12.0, a beta of 0.75 for Benson Industries, and a risk-free rate of 4.0, what is the expected return for Benson Industries?

A) 13.0
B) 10.0
C) 9.0
D) 4.0

Question 2

The Security Market Line has ________.

A) a positive slope
B) a negative slope
C) no slope
D) a beta of 1.0

Harbringer · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: B
Explanation: B) The equation for the SML is E(ri) = rf + (rf + E(rm) - rf i)
= 4.00 + 0.75 (12.00 - 4.00) = 10.00.

Answer to Question 2

Answer: A