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Suppose You Forecast That the Market Index Will Earn a Return

Question 18

Multiple Choice

Suppose you forecast that the market index will earn a return of 15% in the coming year.Treasury bills are yielding 6%.The unadjusted β of Mobil stock is 1.30.A reasonable forecast of the return on Mobil stock for the coming year is _________ if you use Merrill Lynch adjusted betas.


A) 15.0%
B) 15.5%
C) 16.0%
D) 16.8%
E) none of these

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