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:

Electroencephalogram

A test that measures electrical activity in the brain using electrodes attached to the scalp, used to detect potential problems associated with this activity.

Abbreviation

A brief form of a word or phrase designed to conserve space or eliminate repetition.

Pet

A domestic or tamed animal kept for companionship or pleasure.

Meaning

The significance or understanding conveyed by words, signs, symbols, or actions.