What is nominal rate of return on these bonds

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Reference no: EM131993536

1. The outstanding bonds of Roy Thomas, Inc. provide a real rate of return of 4.1 percent. The current rate of inflation is 2.4 percent. What is the nominal rate of return on these bonds?

A 6.50 percent

B 6.60 percent

C 1.02 percent

D 1.70 percent

F 1.07 percent

2. Security X has an expected rate of return of 13% and a beta of 1.15. The risk-free rate is 5% and the expected market risk premium is 6%. According to the capital asset pricing model (CAPM), security X is ____________ .

a. fairly priced

b. overpriced

c. underpriced

d. None of the above answers are correct

Reference no: EM131993536

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