The actual return provided by a security is 24% whereas expected return is 22.4%. Its risk free rate is 8% and return on a broad market index is 20%. The beta of the security, if it is correctly priced in the market unde

CS Executive · Corporate and Management Accounting · PYQS · December 2023
The actual return provided by a security is 24% whereas expected return is 22.4%. Its risk free rate is 8% and return on a broad market index is 20%. The beta of the security, if it is correctly priced in the market under CAPM, is:
(A) 1.0
(B) 1.2
(C) 1.5
(D) 2.4

Answer & Explanation:

Correct Answer: Option (B)

Official answer key: (B).

Topics: Financial Management

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