The Probability Distribution for R_M for the Coming Year Is

question 55

Multiple Choice

The probability distribution for r_M for the coming year is as follows: If r_RF = 6.05% and Stock X has a beta of 2.0,an expected constant growth rate of 7 percent,and D₀ = $2,what market price gives the investor a return consistent with the stock's risk?

• A) $25.00
• B) $37.50
• C) $21.72
• D) $42.38
• E) $56.94

---

Definitions:

Earrings

Jewelry worn on the earlobes or other parts of the ear, often decorative and made from various materials like metal, stones, or beads.

Ounces

A unit of weight in the avoirdupois (approximately 28.35 grams) or troy (approximately 31.10 grams) systems.

Gold

A precious metal with high economic value, often used in jewelry, electronics, and as an investment.

Turquoise

A blue-to-green mineral that's often used as a gemstone in jewelry and decorative items.