Which One of the Following Stocks Is Correctly Priced If

question 66

Multiple Choice

Which one of the following stocks is correctly priced if the risk-free rate of return is 2.84 percent and the market rate of return is 10.63 percent? $\begin{array}{ccc}&& \text { Expected } \\\text { Stock } & \text { Beta } & \text { Retumn } \\\mathrm{A} & .93 & .0892 \\\mathrm{~B} & 1.18 & .1203 \\\mathrm{C} & 1.47 & .1540 \\\mathrm{D} & 1.02 & .1006 \\\mathrm{E} & 1.26 & .1187\end{array}$

• A) A
• B) B
• C) C
• D) D
• E) E

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Definitions:

Suturing

The process of sewing or stitching up a wound or incision; commonly used to close cuts so that they can heal properly.

Infection

The invasion and multiplication of microorganisms such as bacteria, viruses, and parasites that are not normally present within the body.

Synovial Membrane

A connective tissue that lines the inner surface of capsules of synovial joints and tendon sheaths, producing a fluid for lubrication.

Serous Membrane

A thin layer of tissue that lines certain internal cavities of the body, producing a serous fluid to lubricate these cavities.