Assume That a Security Is Fairly Priced and Has an Expected

question 63

Multiple Choice

Assume that a security is fairly priced and has an expected rate of return of 0.13. The market expected rate of return is 0.13, and the risk-free rate is 0.04. The beta of the stock is

• A) 1.25.
• B) 1.7.
• C) 1.
• D) 0.95.

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Definitions:

Polygenic

Describing a trait or condition influenced by multiple genes, contributing to the complexity of genetic inheritance and variations in phenotype.

Observable Characteristics

Traits or features of an organism that can be seen or measured, such as physical appearance and behavior.

Phenotype

The set of observable characteristics of an individual resulting from the interaction of its genotype with the environment.

Genotype

The genetic makeup of an organism, consisting of both the visibly expressed characteristics and the non-expressed ones.