Company a Has a Beta of 0

question 143

Multiple Choice

Company A has a beta of 0.70, while Company B's beta is 1.20.The required return on the stock market is 11.00%, and the risk-free rate is 4.25%.What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.)

• A) 2.75%
• B) 2.89%
• C) 3.05%
• D) 3.21%
• E) 3.38%

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Definitions:

Systems Therapy

A therapeutic approach that emphasizes understanding individuals within the context of their relationships, viewing problems within the dynamics of the entire system.

Homeostasis

The tendency of a system, especially the physiological system of living organisms, to maintain internal stability.

Reframing

A cognitive behavioral therapy technique that involves changing the way a situation is perceived to manage feelings and behaviors more effectively.

Strategic Therapy

A therapeutic approach that focuses on solving specific problems within the family or individual, often through direct interventions and carefully designed strategies.