A Stock Has an Expected Return of 12

question 2

Multiple Choice

A stock has an expected return of 12.25 percent. The beta of the stock is 1.15 and the risk-free rate is 5 percent. What is the market risk premium?

• A) 1.30%
• B) 6.50%
• C) 15.00%
• D) 6.30%
• E) 7.25%

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Definitions:

Middle Classes

A socioeconomic group between the working class and the upper class, typically characterized by moderate to high income, education, and professional occupations.

Negative Symptoms

Features of schizophrenia and other disorders characterized by deficits or diminutions, such as lack of emotion, reduced social functioning, or apathy.

Poor Prognosis

An expectation that a condition or disease will not improve significantly and may worsen over time.

Deficiency

A lack or shortage of something necessary, often referring to a nutrient or quality.