Managerial Finance (Fin 3220) 4. The risk free rate is 4%, and the required return on the market is 12%. What is the required return on an asset with a beta of 1.5 A. 12% B. 22% C.16% D. 4% E. 13% S. The preferred stock of Rail Lines, Inc. pays a constant annual dividend of $7.50 and sells for $59.70 a share. What is the rate of return on this security? A. 10.38 percent B. 11.63 percent C. 12.56 percent D. 12.72 percent E. 12.84 percent 6. Which one of the following is an example of systematic risk? A. investors panic causing security prices around the globe to fall precipitously B. a flood washes away a firm's warehouse C. a city imposes an additional one percent sales tax on all products D. a toymaker has to recall its top-selling toy E. corm prices increase due to increased demand for alternative fuels