A Stock Has a Beta of 1

question 18

Multiple Choice

A stock has a beta of 1.58 and an expected return of 16.2%. The risk-free rate is 3.8%. What is the market risk premium?

• A)7.85%
• B)10.01%
• C)11.72%
• D)12.50%
• E)13.40%

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Definitions:

Executive Analyst

A professional role responsible for analyzing and evaluating the operational, financial, and strategic performance of an organization, often providing insights and recommendations to executives.

Immediate Situation

The current and pressing circumstances or conditions that require attention.

Self-Monitoring

An individual's ability to regulate behavior to accommodate social situations, often relating to the awareness of one’s own performance and abilities.

Adjust Behaviour

Changing or modifying one's actions in response to external factors or feedback.