The Risk-Free Rate Is 2

question 32

Multiple Choice

The risk-free rate is 2%. The expected rate of return on the market is 12%. Beta and the expected rate of return for four shares are as follows.: ABC .8, 10%; DEF 1, 12%; GHI 1.2, 13%, and JKL 2, 22%. Which of these shares should not be purchased?

• A) GHI.
• B) JKL.
• C) DEF.
• D) ABC.

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Definitions:

Cancelling Contract

The act of terminating an agreement or contract before its fulfillment or end date.

UCC

Stands for the Uniform Commercial Code, a set of laws that regulate sales and commercial transactions in the United States.

Notice Requirement

Legal obligation to inform or provide official notice to parties involved in an agreement or legal process.

Aggrieved Party

An individual or entity that has suffered a legal wrong or injury for which the law provides a right to seek relief or compensation.