Which One of the Following Shares Is Correctly Priced (Rounded

question 87

Multiple Choice

Which one of the following shares is correctly priced (rounded up to one decimal place) if the risk-free rate of return is 2.5 % and the market risk premium is 8%?
$\begin{array} { | l | l | l | } \hline \text { Share } & \text { Beta } & \text { Expected Return } \\\hline \text { A } & 68 & 8.2 \% \\\hline B & 1.42 & 13.9 \% \\\hline \text { C } & 1.23 & 11.8 \% \\\hline \text { D } & 1.31 & 12.6 \% \\\hline \text { E } & 94 & 9.7 \% \\\hline\end{array}$

• A)A
• B)B
• C)C
• D)D
• E)E

---

Definitions:

Well-adjusted

Describes an individual who is mentally and emotionally stable, able to cope effectively with the stresses and demands of life.

Rebellious

Exhibiting defiance against authority or resistance to conventions or norms.

Cognitive Development

The process by which individuals acquire and evolve their thinking skills, understanding, and problem-solving capabilities throughout the lifespan.

Gradual Changes

Slow and incremental adjustments or transformations over time.