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:

Survival Functions

The biological processes or behaviors that help living organisms to stay alive, including responses to environmental pressures and threats.

Heartbeat

The rhythmic contraction and expansion of the heart, pumping blood throughout the body, essential for circulatory system function.

Magnetic Fields

Invisible fields generated by electric charges in motion, affecting the behavior of charged objects in the vicinity.

Electrical Activity

The movement of electrical charges or signals through neurons in the brain or through other electrically active parts of the body, such as the heart.