- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 2. Portfolio Risk and Return: Part II
- Subject 4. Calculation and Interpretation of Beta
CFA Practice Question
Suppose the Technee Corporation's common stock has a beta of 1.2. If the risk-free rate is 5% and the expected market return is 8%, the expected return for Technee's common stock is ______.
B. 6.0%
C. 8.6%
A. 3.0%
B. 6.0%
C. 8.6%
Correct Answer: C
5 + 1.2(8 - 5) = 8.6%
User Contributed Comments 3
| User | Comment |
|---|---|
| mattg | E(Rstock)=Rf+(E(Rm-Rf) x Beta(stock) |
| davcer | the beta is higher than 1, so the only possible answer is C |
| ldfrench | CAPM |