Use the Following Information to Answer the Question(s)below

question 67

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%.Security "X" goes up on average by 29% when the market goes up and goes down by 11% when the market goes down.Security "Y" goes down on average by 16% when the market goes up and goes up by 16% when the market goes down.Security "Z" goes up on average by 4% when the market goes up and goes up by 4% when the market goes down.
-The expected return on a security with a beta of 1 is closest to:

• A)-4.0%.
• B)3.2%.
• C)4.0%.
• D)8.0%.

---

Definitions:

Treasury Stock

Represents shares that were once part of the outstanding shares but were bought back by the company. These shares don't have voting rights or dividend rights.

Investing Activities

Transactions involving the acquisition and disposal of long-term assets and other investments not considered as cash equivalents.

Book Value

The net value of a company's assets as recorded on its financial statements, subtracting liabilities from the total assets.

Indirect Method

A way of calculating cash flows in the cash flow statement where net income is adjusted for changes in balance sheet items to calculate operating cash flows.