OLG Stock Has a Beta of 0

question 87

Multiple Choice

OLG stock has a beta of 0.98 and an expected return of 10.52 percent.The risk-free rate of return is 3.02 percent,and the market rate of return is 10.47 percent.Which one of the following statements is true given this information?

• A)OLG stock is correctly priced.
• B)The return on OLG stock will graph above the security market line.
• C)The expected return on OLG stock based on the capital asset pricing model is 10.13 percent.
• D)OLG stock has more systematic risk than the overall market.
• E)OLG stock is overpriced.

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Definitions:

Nourishment

The substances necessary for growth, health, and good condition, often referred to in the context of food and nutrition.

Species

A basic unit of biological classification, defined as a group of living organisms consisting of similar individuals capable of exchanging genes or interbreeding.

Protective Shells

Hard outer coverings that serve to shield organisms from environmental hazards and potential predators.

Camouflage

A method or pattern used by animals and military forces to blend with their environment to conceal themselves from predators or enemies.