In the Equation K_j = R_f + ß_j (R_m -

question 26

Multiple Choice

In the equation K_j = R_f + ß_j (R_m - R_f) :

• A) beta (ß_j)is the stock's measure of volatility relative to the company's historical volatility.
• B) R_m - R_f is the dollar discount on the market rate.
• C) K_j is the expected volatility of company j.
• D) ß_j (R_m - R_f)is the expected return above the risk-free rate for the stock of company j.