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.)

• A) 8.76%
• B) 8.98%
• C) 9.21%
• D) 9.44%
• E) 9.68%

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Definitions:

Cuneiform Bones

A set of three small bones in the human foot, located between the navicular bone and the first, second, and third metatarsal bones.

Metatarsal Bones

The five long bones in the foot that connect the ankle to the toes.

Credibility

The quality of being trusted and believed in, often achieved through reliability, validity, and competence.

Skepticism

An attitude of doubt or a disposition to incredulity either in general or toward a particular object.