Question

Assume that the market is in equilibrium and that stock betas can be estimated with historical data. The returns on the market, the returns on United Fund (UF), the risk-free rate, and the required return on the United Fund are shown below. Based on this information, what is the required return on the market,      ?

Year	Market	UF
2011	−9%	−14%
2012	11%	16%
2013	15%	22%
2014	5%	7%
2015	−1%	−2%

     :         7.00%; r_United:           85.00%;

Select the correct answer.

a. 59.08%

b. 59.00%

c. 58.84%

d. 59.16%

e. 58.92%

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Answer 1

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