Porter Inc's Stock Has an Expected Return of 12

question 90

Multiple Choice

Porter Inc's stock has an expected return of 12.25%,a beta of 1.25,and is in equilibrium.If the risk-free rate is 5.00%,what is the market risk premium?

• A)5.80%
• B)5.95%
• C)6.09%
• D)6.25%
• E)6.40%

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Definitions:

Discretion

The freedom to decide what should be done in a particular situation, often within the framework of one’s role or authority.

Referent Power

A form of influence based on the leader’s ability to cultivate respect, admiration, and loyalty among followers.

Respect

A feeling of deep admiration for someone or something elicited by their abilities, qualities, or achievements.

Coercive Power

is the ability to influence others' behavior through threats, punishment, or other negative sanctions, relying on fear to gain compliance.