CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Suppose the DiscMarc Corporation's common stock has a return of 10%. Assume the risk-free rate is 5%, the expected market return is 8%, and no unsystematic influence affected DiscMarc's return. The beta for DiscMarc is ______.

A. 1.00
B. 1.67
C. 3.33
Correct Answer: B

10 = 5 + b (8 - 5)
5 = 3b
b = 5/3 = 1.67

User Contributed Comments 5

User Comment
mattg Actual return aka "return" means "expected return"
johntan1979 Woah there... not sure where you got that but ACTUAL is NOT the same as EXPECTED return.
jonan203 you cannot predict actual returns, EVER! there are a billion, zillion compliance regulations regarding the statement you just made mattg.
etmzkn @johntan1979: like your comments. keep your style. and also thanks for contributions. generally i skip most and read yours first.
khalifa92 mattg is probably trolling.
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