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%

---

Definitions:

Prejudice

A strong, unreasonable dislike or hatred of a group, based on a negative stereotype.

Stanford Prison Study

A psychological experiment conducted in 1971 that investigated the effects of perceived power, focusing on the struggle between prisoners and prison officers.

Role

A given social position that is governed by a set of norms for proper behavior.

Milgram's Study

A series of social psychology experiments conducted by Stanley Milgram, demonstrating the power of authority in compelling individuals to perform acts conflicting with their personal conscience.