Elephant Company Common Stock Has a Beta of 1

question 67

Multiple Choice

Elephant Company common stock has a beta of 1.2.The risk-free rate is 6 percent and the expected market rate of return is 12 percent.Determine the required rate of return on the security.

• A)7.2%
• B)14.4%
• C)19.2%
• D)13.2%

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Definitions:

Stable Characteristics

Traits or features of an individual's personality that are consistent over time and across different situations, forming the basis of one's character.

Commonalities

Features or characteristics that are shared by different groups or things.

Cultural Value

The shared beliefs, norms, and practices that shape the social behaviors and expectations within a specific group or society.

Individualism

A social philosophy advocating for individual autonomy over the control of the collective or government.