The Historical Returns Data for the Past Three Years for Stock

question 12

Multiple Choice

The historical returns data for the past three years for Stock B and the stock market portfolio are: Stock B: 24%, 0%, 24%, Market Portfolios: 10%, 12%, 20%. Calculate the required rate of return (cost of equity) for Stock B using CAPM. (The risk-free rate of return
= 4%)

• A) 8.6%
• B) 12.6%
• C) 14.3%
• D) None of the above

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Definitions:

Fiduciary Duty

A duty under the law for one entity to prioritize the welfare of another when managing their money or assets.

Automotive Repair

The process of maintaining and fixing cars and other vehicles to ensure their proper functioning and safety.

Breach of Duty

A failure to fulfill a legal or ethical obligation, often leading to legal liability for any resulting damages.

BigBox

Large retail stores typically part of a chain of stores, known for selling a variety of goods at lower prices.