Quiz Space

Corporate Finance · Quiz 2 · 12 Apr 2026 · January 2026 term

Question 12: A portfolio has a beta of 1.5. The risk-free rate is 5% …

Question 12

+4 marksOne correct option

A portfolio has a beta of 1.5. The risk-free rate is 5% and the market risk premium is 8%. According to CAPM, what is the expected return?

  1. A

    5%

  2. B

    10%

  3. C

    12%

  4. D

    17%

Show answer

Correct answer

  • D

    17%

See the whole paperTake it as a mock test

Question 12 of 25 in the IIT Madras BS Corporate Finance (Corporate Finance) Quiz 2 paper sat on 12 Apr 2026, in the January 2026 term (Corporate Finance 07 Apr 26). It carries 4 marks.

More questions from this paper

  1. Q1Figure question
  2. Q2Figure question
  3. Q3If the slope of the Capital Allocation Line (CAL) is 0.5 and the risk-free rate is 4%, what is the expected return of a…
  4. Q4Figure question
  5. Q5A risk-neutral investor is offered a bet: 20% chance to win 500, 30% chance to win 200, and 50% chance to lose 100. Wha…
  6. Q6A risk-neutral lender requires an expected return of 10%. A borrower has a 20% probability of total default (0 recovery…
  7. Q7Figure question
  8. Q8What is the Sharpe Ratio for a portfolio with an expected return of 15%, a risk-free rate of 3%, and a standard deviati…
  9. Q9Figure question
  10. Q10Figure question
  11. Q11You short-sell 80 shares of a stock at Rs 60 per share. One year later, you buy them back at Rs 55 per share. Ignoring …
  12. Q13Figure question
  13. Q14Figure question
  14. Q15Figure question
  15. Q16A project pays 200 units with probability 0.25, 400 units with probability 0.40 and 600 units with probability 0.35, in…
  16. Q17An asset has a return of 20% in a "Boom" condition (probability 0.3), 8% in a “Normal” condition (probability 0.4) and …
  17. Q18MNO Bank has total assets of Rs 500 billion and a leverage ratio of 5. What is the value of the total liabilities of MN…
  18. Q19Figure question
  19. Q20Figure question
  20. Q21What would be the appropriate promised rate of return that the creditor of the loan would demand?
  21. Q22What is the expected payoff for the equity owner in the next year?
  22. Q23What would be the standard deviation of the rate of return of the equally weighted portfolio?
  23. Q24Suppose you would like to construct a portfolio with an expected rate of return of 19%. What weights would you put on A…
  24. Q25What are the weights of Asset 1 and Asset 2 in the minimum variance portfolio?