White Company stock has a beta of 2 and a required return of 23%, whil

White Company stock has a beta of 2 and a required return of 23%, while Black Company stock has
a beta of 1.0 and a required return of 14%.

The standard deviation of returns for White Company is
10% more than the standard deviation for Black Company. The risk-free rate of return according to
the CAPM is
A) 5%.
B) 6%.
C) 4%.
D) impossible to determine with the information given.

ANSWER

A