The Stock of Static Corporation Has a Beta of 0

question 24

Multiple Choice

The stock of Static Corporation has a beta of 0.7. If the expected return on the market increases by 6%, the expected return on Static Corporation should increase by

• A)5.3%.
• B)8.6%.
• C)4.2%.
• D)none of the above

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Definitions:

Elon Musk

An entrepreneur and business magnate known for his involvement in SpaceX, Tesla, Inc., and several other high-tech ventures.

Normal Profit

The minimum amount of revenue that a company needs to cover both explicit and implicit costs.

Entrepreneurs

Individuals who, rather than working as employees, run a business and assume all the risks and rewards of a given business venture, idea, or good or service offered for sale.

Allocative Efficiency

A state of resource distribution where resources are allocated in a way that maximizes the total benefit received by all members of society.