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:

Achievement Motive

The drive or desire to accomplish goals and excel in activities, often characterized by persistence and effort in striving for success.

Affiliation Motive

An innate drive to associate with others, create social bonds, and maintain relationships.

Premature Low-Birth-Weight

A condition referring to infants born prematurely with a weight significantly lower than the norm for their gestational age.

Minimally Touched

A description of something that has been handled or affected as little as possible.