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Stock A's Stock Has a Beta of 1

question 26

Multiple Choice

Stock A's stock has a beta of 1.30, and its required return is 12.00%.Stock B's beta is 0.80.If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.)


Definitions:

Highly Trained Individuals

Persons who have received extensive instruction and practice in a particular skill set or field of study.

External Demands

The requirements, pressures, or needs placed upon an organization or individual by external factors or entities.

Decentralization

The dispersion of functions, powers, people, or things away from a central location or authority.

Dominant Defensiveness

Characterizes a behavioral response in which individuals assert control or superiority excessively to protect themselves from perceived threats or criticism.

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