The Two Factor Model on a Stock Provides a Risk

question 72

Multiple Choice

The two factor model on a stock provides a risk premium for exposure to market risk of 9%,a risk premium for exposure to interest rate of (-1.3%) ,and a risk free rate of 3.5%.What is the expected return on the stock?

• A) 8.7%
• B) 11.2%
• C) 13.8%
• D) 15.2%

Analyze the influence of U.S. residents' purchases of foreign assets on exchange rates and market curves.

Evaluate the consequences of fiscal policy changes on government deficit, net capital outflow, and the economy.

Determine the effect of changes in fiscal policy on the market for loanable funds and foreign exchange market.

Understand the impact of changes in perceived asset risks on the loanable funds market and exchange rates.

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Definitions:

Gene Expression

The process by which information from a gene is used to synthesize functional gene products (often proteins) that can affect a cell's structure and function.

Promoter

The nucleotide sequence in DNA to which RNA polymerase attaches to begin transcription.

Labeled

Marked with identifiers or tags for ease of identification or explanation.

Eukaryotic Transcription

The process by which genetic information from DNA is copied to messenger RNA in cells with a nucleus.