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%

---

Definitions:

Memory

The mental function responsible for storing and retrieving information.

Human Reasoning

The cognitive process used by humans to generate and evaluate arguments, assumptions, and hypotheses, leading to the formulation of conclusions or decisions.

Cognitive Perspective

An approach in psychology that focuses on how we think, with an emphasis on understanding how individuals perceive, process, and remember information.

Limits

Refers to boundaries or constraints that restrict or define possible actions or outcomes.