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Corporate Finance · End Term · 21 Dec 2025 · September 2025 term

Question 21: A risky asset has an expected rate of return of 16% and …

Question 21

+4 marksOne or more correct options

A risky asset has an expected rate of return of 16% and a standard deviation of 20%. If the risk-free rate is 4%, select the correct statements.

Select all that apply.

  1. A

    The Sharpe ratio of the asset is 0.6.

  2. B

    The risk premium of the asset is 12%.

  3. C

    The slope of the capital allocation line passing through this asset is 0.8.

  4. D
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Correct answers

  • A

    The Sharpe ratio of the asset is 0.6.

  • B

    The risk premium of the asset is 12%.

  • D

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Question 21 of 30 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 21 Dec 2025, in the September 2025 term (Corporate Finance 18 Dec 25). It carries 4 marks.

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