There Is a 35% Probability That a Particular Stock Will

question 69

Multiple Choice

There is a 35% probability that a particular stock will earn a 16% return and a 65% probability that it will earn 10%. What is the risk-free rate if the risk premium on the stock is 7.5%?

• A)4.20%
• B)4.60%
• C)5.20%
• D)5.40%
• E)5.80%

Recognize the roles and needs of stakeholders in business communication.

Understand the dynamics of social and mobile communication in business.

Appreciate the significance of audience expectations and message adaptation.

Recognize the challenges and benefits of integrating mobile technology in business.

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Definitions:

Historical Cost

The original monetary value of an economic item. Historical cost is based on the stable measuring unit assumption.

Capital Stock

The amount of ownership shares of a company, including both common and preferred stock, authorized and issued to investors.

Stated Value

An arbitrary value assigned to a company's share that does not have a par value, used for accounting purposes.

Market Value

The present cost at which a service or asset is available for buying or selling in the market.