A Stock Has a Beta Coefficient, β, Equal to 1

question 32

Multiple Choice

A stock has a beta coefficient, β, equal to 1.20. The risk premium associated with the market is 9 percent, and the risk-free rate is 5 percent. Application of the capital asset pricing model indicates that the stock's appropriate return should be _____. 

• A)9.8%
• B)5.2%
• C)12.5%
• D)15.8%
• E)17.2%