The Historical Returns for the Past Four Years for Stock

question 16

Multiple Choice

The historical returns for the past four years for Stock C and the stock market portfolio are Stock C: 10 percent, 30 percent, 20 percent, 20 percent; market portfolio: 5 percent, 15 percent, 25 percent, 15 percent. If the risk-free rate of return is 5 percent and the expected market return is 12 percent, calculate the required rate of return on Stock C using the CAPM.

• A)5.0 percent
• B)10.0 percent
• C)8.5 percent
• D)13.0 percent

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Definitions:

Atomic Singular Statement

An atomic singular statement is a minimal, unbreakable statement that asserts something about a specific individual or entity.

Quantifier

A word or phrase, often a prefix in logical propositions, that expresses the quantity of subjects to which the proposition applies.

Open Sentences

Mathematical or logical sentences containing one or more variables that can be made true or false depending on the values of those variables.

Scope

The extent or range of view, understanding, or application of a subject or concept.