Exhibit 82
Use the Information Below for the Following Problem(S)
You

question 20

Multiple Choice

Exhibit 8.2
Use the Information Below for the Following Problem(S)
You expect the risk-free rate (RFR) to be 3 percent and the market return to be 8 percent. You also have the following information about three stocks.
$$\begin{array} { c c c c c } \text { Stack } & \text { Eeta } & \begin{array} { c } \text { Current } \\\text { Price }\end{array} & \begin{array} { c } \text { Expected } \\\text { Price }\end{array} & \begin{array} { c } \text { Experted } \\\text { Dividend }\end{array} \\\hline \mathbf { X } & 1.25 & \$ 20 & \$ 23 & \$ 1.25 \\\mathbf { Y } & 1.50 & \$ 27 & \$ 29 & \$ 0.25 \\\mathbf { Z } & 0.90 & \$ 35 & \$ 38 & \$ 1.00\end{array}$$
-Refer to Exhibit 8.2.What are the estimated rates of return for the three stocks (in the order X,Y,Z) ?

• A) 21.25%, 8.33%, 11.43%
• B) 6.20%, 2.20%, 8.20%
• C) 16.50%, 5.50%, 22.00%
• D) 9.25%, 10.5%, 7.5%
• E) 15.00%, 3.50%, 7.30%

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Definitions:

Aggregate Supply Curve

A graphical representation showing the relationship between the total supply of goods and services produced in an economy and the price level.

Price Level

The aggregated mean of prices for all economic goods and services.

Positively Sloped

Describes a line on a graph that rises from left to right, indicating a positive relationship between two variables where an increase in one variable corresponds with an increase in the other.

Aggregate Supply Curve

A graphical representation of the total amount of goods and services that companies in an economy are willing and able to produce at different price levels.