Macroeconomics 20th Edition by Campbell McConnell,Stanley Brue,Sean Flynn

Exercise 22

The interest rate on short-term U.S. govertunent bonds is 4 percent. The risk premium for any asset with a beta = 1.0 is 6 percent. What is the average expected rate of return on the market portfolio?
A) 0 percent.
B) 4 percent.
C) 6 percent.
D) 10 percent.