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A security has beta 1.5; risk-free rate 7%; market risk premium 6%. Required return is:
A15.0%
B16.0%
C13.0%
D12.5%
Answer & Solution
Correct answer: B. 16.0%
1. Identify what the question asks: this concept maps to capmrequired (§7).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (B).
_Source: ICAI BoS CA Final Paper 2, Ch 6 "Portfolio Management"_
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