Stock a Is a Risky Asset That Has a Beta

question 48

Multiple Choice

Stock A is a risky asset that has a beta of 1.4 and an expected return of 13.2%. Stock B is also a risky asset and has a beta of 1.25. The risk-free rate is 5.5%. Assuming both stocks are correctly priced, what is the expected return on Stock B?

• A)11.90%
• B)12.11%
• C)12.29%
• D)12.38%
• E)12.46%

---

Definitions:

Customer Benefit Statements

Communications that outline the advantages or positive outcomes that a customer can expect from a product or service.

Curiosity Approach

A sales technique that involves sparking potential customers' interest by revealing information gradually to create intrigue.

Premium Approach

A sales strategy where additional benefits or perks are offered to customers to enhance the perceived value of a purchase.

Product Approach

A sales strategy focused on the features and benefits of the product itself rather than on the needs or wants of the consumer.