Exhibit 93
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Stocks

question 10

Short Answer

Exhibit 9.3
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Stocks A, B, and C have two risk factors with the following beta coefficients. The zero-beta return ( $\lambda$ ₀) = .025 and the risk premiums for the two factors are ( $\lambda$ ₁) = .12 and ( $\lambda$ ₀) = .10. $$\begin{array} { c c c } \text { Stock } & \text { Factor } 1 b _ { i 1 } & \text { Factor } 2 b _ { i 2 } \\\hline \text { A } & - 0.25 & 1.1 \\\text { B } & - 0.05 & 0.9 \\\text { C } & 0.01 & 0.6\end{array}$$
-Refer to Exhibit 9.3. Assume that stocks A, B, and C never pay dividends and stocks A, B, and C are currently trading at $10, $20, and $30, respectively. What is the expected price next year for each stock? $\begin{array}{llll}&A&B&C\\\text { a. } & \$ 10.82 & \$ 21.82 & \$ 30.99 \\\text { b. } & \$ 11.05 & \$ 22.18 & \$ 30.96 \\\text { c. } & \$ 11.32 & \$ 22.56 & \$ 30.99 \\\text { d. } & \$ 11.65 & \$ 22.42 & \$ 30.96 \\\text { e. } & \$ 18.50 & \$ 37.00 & \$ 48.30\end{array}$

---

Definitions:

Social Cohesion

The bond that brings a society together, marked by strong social ties, a sense of belonging, and the willingness to participate in community life.

Durkheim

A founding figure in sociology, known for his studies on social integration, religion, and the development of sociology as a discipline.

Rituals

Prescribed procedures or ceremonies often performed for their symbolic value, which can play a significant role in the cultural or religious practices of a community.

Poverty

A situation in which people or groups do not have the necessary financial means and basic needs to maintain a minimum quality of life.