Potash Corp Stock Has a Beta of 1

question 30

Multiple Choice

Potash Corp stock has a beta of 1.2,while Tim Horton's stock has a beta of 1.7.If the risk-free rate is 2.2%,and the market risk premium is 7%,what is the expected return on a portfolio with 40% weight in Potash and the remainder in Tim Horton's?

• A)9.4%
• B)12.7%
• C)10.5%
• D)11.6%
• E)13.25%

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Definitions:

Perception

The process by which individuals interpret and organize sensory information to produce a meaningful experience of the world.

Hawthorne Experiment

A series of studies conducted in the 1920s and 1930s that examined the effects of work environment changes on employee productivity, leading to insights on the importance of social factors and employee attention.

Informal Organization

The network of personal and social relationships that naturally form within an organization, which can influence the formal structure.

Informal Organization

The network of personal and social relationships that form naturally within an organization outside of the formal structure.