The Required Return on Beta Stock Is 14

question 1

Multiple Choice

The required return on Beta stock is 14%. The risk-free rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk?

• A) 8%
• B) 10%
• C) 12%
• D) 14%

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Definitions:

Ethology

The scientific study of animal behavior, often with a focus on behaviors that are instinctive or genetically programmed.

Natural Habitat

The original environment in which a plant, animal, or organism lives and grows best, without human intervention.

Instinct Concept

The inherent inclination of a living organism towards a particular complex behavior.

Motivated Behavior

Actions that are driven by internal needs or desires, often aimed at achieving a specific goal or fulfilling a need.