Stock a Has a Required Return of 19 Percent

question 104

Multiple Choice

Stock A has a required return of 19 percent. Stock B has a required return of 11 percent. Assume a risk-free rate of 4.75 percent. By how much does Stock A's risk premium exceed the risk premium of Stock B?

• A) 3.25 percent
• B) 6.25 percent
• C) 8.00 percent
• D) 7.00 percent

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Definitions:

Cortisol

A steroid hormone produced by the adrenal glands, often released in response to stress and low blood-glucose concentration, playing an important role in the body's fight-or-flight response.

Method of Transmission

The way in which a disease spreads from one individual or organism to another.

Biopsychosocial Model

A holistic approach to diagnosing and treating illnesses by considering biological, psychological, and social factors.