Exhibit 84
Use the Information Below for the Following Problem(S)

question 53

Multiple Choice

Exhibit 8.4
Use the Information Below for the Following Problem(S)
$$\begin{array} { c c c c c } \text { Stack } & \text { Beta } & \text { Current Prica } & \text { Expertad Prica } & \text { Expertad Dividend } \\\hline \mathbf { X } & { [ .8 } & \$ 12.50 & \$ 13.10 & \$ 0.80 \\Y & 1.1 & \$ 2.25 & 9.76 & \$ 0.20 \\Z & 2.1 & \$ 25.70 & \$ 30.04 & \$ 0.00\end{array}$$
-Refer to Exhibit 8.4.If the expected return on the market is 11.5% and the risk-free rate of return is 4.5%,then what are the required rates of return for stocks X,Y,and Z based on the CAPM?
    X    Y      Z

• A) 4.8%  18.3% 16.9%
• B) 7.2%  20.7%  22.3%
• C) 10.7%  17.5%  14.4%
• D) 10.1%  12.2%  19.2%
• E) 11.1%  12.2%  21.3%

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Definitions:

Evaluate

To evaluate or gauge the worth, importance, or magnitude of something.

Six-figure Accuracy

A measure of precision that implies numerical values are accurate to within plus or minus one out of a hundred thousand.

Simplify

To simplify means to make something less complex or easier to understand, often by reducing it to its basic components.

Exponent Laws

Mathematical rules governing operations involving powers, such as multiplication and division of exponents.