Which One of the Following Stocks Is Correctly Priced If

question 54

Multiple Choice

Which one of the following stocks is correctly priced if the risk-free rate of return is 3.6% and the market rate of return is 10.5%?

• A) A
• B) B
• C) C
• D) D
• E) E

---

Definitions:

Total Revenue

The total amount of money a firm receives from selling its goods or services, calculated as the unit price multiplied by the quantity sold.

Increasing-cost Industry

An industry in which the cost of production increases as the industry's output expands, often due to resource limitations or rising input prices.

Resource Prices

Resource prices are the costs associated with the inputs used in the production process, such as raw materials, labor, and capital.

Industry Expands

This phrase describes the process where the total output or the number of firms in a given industry increases due to factors such as innovation, increased demand, or favorable policies.