Elephant Company Common Stock Has a Beta of 1

question 70

Multiple Choice

Elephant Company common stock has a beta of 1.2. The risk-free rate is 6%, and the expected market rate of return is 12%. Determine the required rate of return on the security.

• A) 7.2%
• B) 14.4%
• C) 19.2%
• D) 13.2%

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Definitions:

Middle Ear

The chamber between the eardrum and cochlea containing three tiny bones (malleus, incus, and stapes) that concentrate the vibrations of the eardrum on the cochlea’s oval window.

Cochlear Implant

A device for converting sounds into electrical signals and stimulating the auditory nerve through electrodes threaded into the cochlea.

Electrical Signals

Pulses of electric current that transmit information within the nervous system and between electronic devices.

Temporal Lobe's

Pertains to the lobes located on the sides of the brain, primarily involved in processing auditory information and encoding memory.