Assume That the Risk-Free Rate Is 5 Percent, and That

question 11

Multiple Choice

Assume that the risk-free rate is 5 percent, and that the market risk premium is 7 percent. If a stock has a required rate of return of 13.75 percent, what is its beta?

• A) 1.25
• B) 1.35
• C) 1.37
• D) 1.60
• E) 1.96

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Definitions:

Genotype

Particular genetic makeup of an individual.

Phenotype

The set of observable characteristics of an individual resulting from the interaction of its genotype with the environment.

Receptor

A specialized cell or group of nerve endings that responds to specific sensory stimuli like heat, light, or touch.

Polypeptide Chain

A long series of amino acids linked by peptide bonds, forming part of the structure of proteins.