Stock A's Stock Has a Beta of 1

question 26

Multiple Choice

Stock A's stock has a beta of 1.30, and its required return is 12.00%.Stock B's beta is 0.80.If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.)

• A) 8.76%
• B) 8.98%
• C) 9.21%
• D) 9.44%
• E) 9.68%

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Definitions:

Cultural Factors

Elements influenced by culture that affect behaviors, values, and beliefs of individuals or groups.

Nature vs. Nurture

A debate concerning the relative importance of an individual's innate qualities (nature) versus personal experiences (nurture) in determining or causing differences in physical and behavioral traits.

Thermoregulation

The process by which an organism maintains its internal temperature within a tolerable range.

Cultural Influence

The impact of societal beliefs, values, and practices on an individual's behavior, thoughts, and feelings.