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Question 827084: The rate of return of certain investments increases as the risk factor of the investment increases. An investment with a risk factor of 2 has a rate of return of 5.0%. An investment with a risk factor of 15 has a rate of return of 14.0%. What is the average rate of return per unit of risk? Round to the nearest hundredth if necessary.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! The rate of return of certain investments increases as the risk factor of the investment increases.
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"An investment with a risk factor of 2 has a rate of return of 5.0%
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An investment with a risk factor of 15 has a rate of return of 14.0%.
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You have 2 points relating rf and rr:: (2,0.05) and (15,0.14)
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What is the average rate of return per unit of risk? Round to the nearest hundredth if necessary.
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average = (0.14-0.05)/(15-2) = 0.09/13 = 0.0069
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Cheers,
Stan H.
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