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CTFA · Question #88
CTFA Question #88: Real Exam Question with Answer & Explanation
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Question
Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a beta of 1.80. The expected return on the market is 10 percent, and the risk-free rate is 6 percent. According to the capital-asset pricing model (CAPM) and making use of the information above, the required return on Plaid Pants' common stock should be , and the required return on Acme's common stock should be .
Options
- A3.6 percent; 7.2 percent
- B9.6 percent; 13.2 percent
- C9.0 percent; 18.0 percent
- D14.0 percent; 23.0 percent
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