You Own $14,000 of Diner's Corp

question 53

Multiple Choice

You own $14,000 of Diner's Corp. stock that has a beta of 2.1. You also own $14,000 of Comm Corp. (beta = 1.3) and $12,000 of Airlines Corp. (beta = 0.6) . Assume that the market return will be 15 percent and the risk-free rate is 6.5 percent. What is the total risk premium of the portfolio?

• A) 11.645 percent
• B) 20.55 percent
• C) 23.905 percent
• D) 38.00 percent

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Definitions:

UCC

The Uniform Commercial Code is an extensive series of statutes that regulate all aspects of commercial dealings in the United States.

Bank Deposits and Collections

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Truth in Savings Act

A federal law designed to promote the disclosure of account terms and fees in the savings accounts and certificates of deposit of banks and other financial institutions.

Depositary Banks

Financial institutions that hold and manage securities for their clients, offering services such as safekeeping, collection of dividends, and exercise of rights.