According to the Capital Asset Pricing Model, Which of the Following

question 34

Multiple Choice

According to the capital asset pricing model, which of the following stocks should have the highest required rate of return? $\begin{array}{c}\begin{array}{lll}\underline{\text {Stock Name}}\\\text {Alpha Autom obiles}\\\text {Beta Electronics}\\\text {Omega Foods}\end{array}\begin{array}{c}\underline{\text { Standard Deviation }} \\19.0 \% \\28.0 \\8.0 \end{array}\begin{array}{c}\underline{\text { Beta}} \\1.8\% \\1.1 \\0.7\end{array}\end{array}$

• A)Beta Electronics because its standard deviation is highest.
• B)Alpha Automobiles because its beta coefficient is highest.
• C)Omega foods because the ration of standard deviation/beta is the lowest.
• D)Not enough information is given to answer this question.

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Definitions:

Management by Best-seller

An approach where management techniques or strategies are adopted from popular business books and literature, often emphasizing trends or concepts validated by successful cases.

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A mindset focused on seeking immediate solutions or responses to problems, often at the expense of long-term effectiveness.

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Research that focuses on exploring ideas or theories rather than numerical data or statistics.

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