Stock a Has a Beta of 1

question 96

Multiple Choice

Stock A has a beta of 1.09 while Stock B has a beta of .76 and an expected return of 8.2 percent.What is the expected return on Stock A if the risk-free rate is 4.6 percent and both stocks have equal reward-to-risk premiums?

• A)11.12 percent
• B)8.07 percent
• C)9.76 percent
• D)10.89 percent
• E)11.73 percent

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Definitions:

Distorted Perceptions

Altered or inaccurate interpretations of sensory information, which can occur due to various psychological conditions.

Impaired Functioning

A reduction in the ability to perform or operate normally, often due to physical or psychological conditions.

Dissociative Identity Disorder

A severe form of dissociation, a mental process which produces a lack of connection in a person's thoughts, memory, and sense of identity.

Distinct Personalities

The presence of two or more different and distinct personality states or identities within a single individual.