Potash Corp Stock Has a Beta of 1

question 58

Multiple Choice

Potash Corp stock has a beta of 1.1,while Tim Horton's stock has a beta of 1.4.The risk-free rate is 1.9%,and the expected return on a portfolio with 30% weight in Potash and the remainder in Tim Horton's is 9.76%.What is the market risk premium?

• A)7%
• B)7.9%
• C)6%
• D)6.9%
• E)7.2%

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Definitions:

Cost Accounting System

A system of accounting for recording, classifying, allocating, summarizing, and analyzing various alternative courses of action for controlling costs.

Service Center

A segment within an organization that provides essential support services or assistance to other departments or units within the organization.