Company X Has a Beta of 1

question 22

Multiple Choice

Company X has a beta of 1.6, while Company Y's beta is 0.7. The risk-free rate is 7 percent, and the required rate of return on an average stock is 12 percent. Now the expected rate of inflation built into rRF rises by 1 percentage point, the real risk-free rate remains constant, the required return on the market rises to 14 percent, and betas remain constant. After all of these changes have been reflected in the data, by how much will the required return on Stock X exceed that on Stock Y?

• A) 3.75%
• B) 4.20%
• C) 4.82%
• D) 5.40%
• E) 5.75%

Recognize the legal aspects and legislation related to job analysis and descriptions, such as ADA.

Distinguish between independent contractors and employees based on work arrangements.

Understand the exclusion criteria for job descriptions.

Appreciate the diversity in job roles within a job class and the importance of specific job functions.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning that no one can be prevented from using them and one person's use does not reduce availability for others.

Commons Dilemma

A situation in which individuals' short-term self-interest conflicts with long-term group interest and well-being, typically regarding the overconsumption of a shared resource.

Scarce Resources

Goods or services that are limited in availability relative to the desires or needs of individuals or systems.

Competition

A situation where two or more parties strive for a goal that cannot be shared, such as a higher rank or prize.