You Determine That LMN Common Stock Has an Expected Return

question 10

Multiple Choice

You determine that LMN common stock has an expected return of 24%.LMN has a Beta of 1.5.The risk-free rate is 5%,and the market expected return is 15%.Which of the following is most likely to happen?

• A) You and other investors will buy up LMN stock and its price will rise.
• B) You and other investors will sell LMN stock and its return will fall.
• C) You and other investors will buy up LMN stock and its return will rise.
• D) You and other investors will sell LMN stock and its price will fall.

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Definitions:

Paired

Describes objects or concepts that are linked or associated with each other in some relationship or function.

Conditioned Stimulus

A formerly neutral signal that, when linked with the unconditioned stimulus, ultimately elicits a conditioned reaction.

Unconditioned Response

An automatic, natural reaction to a stimulus that occurs without prior learning or conditioning.

Fireworks

Pyrotechnic devices that produce visual and auditory effects for entertainment purposes.