The Return on Treasury Notes Is Expected to Be 7

question 50

Multiple Choice

The return on treasury notes is expected to be 7.5%.The market risk premium is 8%.What is the expected return on a stock with a beta of 1.3?

• A)12.95%
• B)12.35%
• C)7.25%
• D)17.90%

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Definitions:

Preferred Stock

Preferred Stock is a class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often entitling holders to fixed dividends but with limited or no voting rights.

Flotation Cost

The total costs associated with issuing new securities, including underwriting, legal, and registration fees.

Issue Price

The initial price at which securities are offered to the public.

Annual Dividend

The total dividend payment a shareholder receives from a company over the course of a year, often expressed as a per share amount.