The Risk-Free Rate of Return Is 3

question 227

Multiple Choice

The risk-free rate of return is 3.78% and the market risk premium is 6.42%. What is the expected rate of return on a stock with a beta of 1.09?

• A) 7.00%
• B) 7.78%
• C) 10.54%
• D) 10.78%
• E) 11.12%

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Definitions:

Ex-Dividend Date

The exact day when a stock is bought or sold without eligibility for the upcoming dividend distribution.

Receive the Dividend

The process where shareholders are paid a portion of the company's earnings, typically in cash or additional shares.

Declaration Date

The date on which a firm’s board of directors declares a dividend.

Earnings Per Share

A company's net profit divided by the number of its shares outstanding, indicating the amount of earnings attributable to each share of stock.