Stock a Has a Required Return of 19 Percent

question 103

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. Which of the following is a correct statement about the two stocks?

• A) Stock A is riskier.
• B) Stock B is riskier.
• C) The stocks have the same risk.
• D) We would need to know if the markets are efficient to answer this question.

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Definitions:

Activities

Tasks, actions, or operations that are carried out as part of a process or to achieve an objective.

Outputs

Refers to the results or products generated by a system, process, or project.

Program Goals

Objectives set by a program that outline the desired achievements or outcomes to be accomplished within a specific timeframe.

Environmental Influences

External factors or conditions in the environment that affect an individual's behavior, development, or life outcomes.