The Common Stock of Chai Tea Inc Has an Expected

question 108

Multiple Choice

The common stock of Chai Tea Inc has an expected return of 14.4%. The return on the market is 10% and the risk-free rate of return is 3.5%. What is the beta of this stock?

• A) .65
• B) 1.09
• C) 1.32
• D) 1.44
• E) 1.68

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Definitions:

Subscription Price

The cost at which existing shareholders can buy additional shares of a company, often at a discount.

Rights Offering

A financial mechanism by which companies offer existing shareholders the right to buy additional shares directly from the company at a predetermined price, usually at a discount, before the shares are offered to the public.

Value Of A Right

In finance, the value associated with a right, such as a stock right, which is the value to buy additional shares at a discounted price.

Market Price

The current valuation at which an asset or service is available for sale or purchase in the marketplace.