The Two Factor Model on a Stock Provides a Risk

question 49

Multiple Choice

The two factor model on a stock provides a risk premium for exposure to market risk of 12%,a risk premium for exposure to silver commodity prices of 3.5% and a risk free rate of 4.0%.What is the expected return on the stock?

• A) 11.6%
• B) 13.0%
• C) 15.3%
• D) 19.5%

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Definitions:

Horizontal Conflict

A dispute or disagreement that occurs between businesses operating at the same level in the distribution channel, such as two competing retailers.

Dual Distribution

A marketing strategy where a company uses two or more channels to reach its target market, often simultaneously selling through direct and indirect channels.

Distribution Coverage

Distribution coverage refers to the measure of how much of the target market has access to a company's products or services through its distribution channels.

Resale Restrictions

Limitations set by manufacturers or distributors that prevent retailers from reselling products beyond certain territories or to certain types of customers.