A Stock Has an Expected Return of 11 Percent,the Risk-Free

question 21

Multiple Choice

A stock has an expected return of 11 percent,the risk-free rate is 5.2 percent,and the market risk premium is 5 percent.What is the stock's beta?

• A)1.08
• B)1.16
• C)1.29
• D)1.32
• E)1.35

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Definitions:

Senior Creditors

Creditors who have priority over other creditors for the repayment of debts, typically in the event of a bankruptcy or liquidation.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all interest payments and the principal repayment.

Coupon Rate

The interest rate on a bond, which is calculated as a percentage of the face value, and paid to the bondholders periodically until maturity.

Par Value

It represents the nominal or face value of a security, such as a share or bond, and is the minimum price at which such securities might be issued originally.