Under the Following Conditions,what Are the Expected Returns for Stocks

question 45

Multiple Choice

Under the following conditions,what are the expected returns for stocks A and B?
$\begin{array}{ll}\lambda^{0}=0.035 & \mathrm{~b}_{\mathrm{a}, 1}=1.00 \\\mathrm{k}_{1}=0.05 & \mathrm{~b}_{\mathrm{a}, 2}=1.40 \\\mathrm{k}_{2}=0.06 & \mathrm{~b}_{\mathrm{b}, 1}=1.70 \\& \mathrm{~b}_{\mathrm{b}, 2}=0.62\end{array}$

• A) 14.8% and 13.8%
• B) 19.8% and 29.5%
• C) 16.0% and 19.8%
• D) 16.9% and 15.9%
• E) None of the above

---

Definitions:

Carrying Cost

The total cost of holding a specific inventory, including storage, insurance, taxes, and opportunity costs, over a certain period.

Restocking Costs

Restocking costs are expenses associated with replenishing inventory, including purchasing, shipping, handling, and storage costs.

Carrying Cost

The total cost of holding a particular inventory, including storage, insurance, depreciation, and opportunity costs.

Variable Cost

Costs that change in proportion to the level of goods or services produced by a business.