Given the Following Data for the a Stock: Risk-Free Rate

question 7

Multiple Choice

Given the following data for the a stock: risk-free rate = 5%; beta (market) = 1.4; beta
(size) = 0.4; beta (book-to-market) = -1.1; market risk premium = 7%; size risk premium =
3) 7%; and book-to-market risk premium = 5.2%. Calculate the expected return on the stock using the Fama-French three-factor model.

• A) 22.3%
• B) 7.8%
• C) 10.6%
• D) none of the above

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Definitions:

Battle Of The Forms

A situation in contract law where two parties form an agreement based on differing standard terms and conditions, typically through the exchange of forms like purchase orders and invoices.

Preprinted Forms

Standardized documents containing preset language used in various types of agreements or contracts.

Uniform Commercial Code

The Uniform Commercial Code (UCC) is a comprehensive set of laws governing commercial transactions in the United States, intended to harmonize the law of sales and other commercial transactions across states.

Mirror-Image Rule

A contractual principle stating that an offer must be accepted exactly without modifications for a valid contract to be formed.