The Risk-Free Rate Is 4

question 14

Multiple Choice

The risk-free rate is 4%.The expected market rate of return is 11%.If you expect CAT with a beta of 1.0 to offer a rate of return of 10%, you should

• A)buy CAT because it is overpriced.
• B)sell short CAT because it is overpriced.
• C)sell short CAT because it is underpriced.
• D)buy CAT because it is underpriced.

---

Definitions:

Job Analysis

The process of examining and detailing the responsibilities, requirements, conditions, and aspects of a specific job.

Critical Incident Method

A performance appraisal method where significant (critical) positive or negative behaviors relevant to job success are recorded by supervisors or peers.

Critical Job Tasks

Essential duties and responsibilities that are key to the performance of a specific job role.

Psychological Importance

The significance or value given to a situation or object based on its impact on mental health or cognitive processes.