The Required Rate of Return on a Stock

question 106

Multiple Choice

The required rate of return on a stock:

• A)is the risk-free rate plus a premium for the risk associated with the stock.
• B)is the return expected based upon currently available information.
• C)is the minimum return that generates trading.
• D)is entirely determined by the return on an average stock.

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Definitions:

Performance

The act of carrying out a task or function, typically evaluated based on its efficiency, accuracy, or effectiveness.

Studying

The act of applying one's mind to learning or understanding a subject, typically through reading or practicing.

Divided Attention

The ability to process two or more responses or react to two or more different demands simultaneously.

Encoding Information

The process by which sensory input is transformed into a format or code that can be stored and utilized by the memory system.