Stock a Is a Risky Asset That Has a Beta

question 46

Multiple Choice

Stock A is a risky asset that has a beta of 1.4 and an expected return of 13.2 percent.Stock B is also a risky asset and has a beta of 1.25.The risk-free rate is 5.5 percent.Assuming both stocks are correctly priced,what is the expected return on stock B?

• A) 11.90 percent
• B) 12.11 percent
• C) 12.29 percent
• D) 12.38 percent
• E) 12.46 percent

---

Definitions:

Nucleotide Sequence

The order of nucleotides in a segment of DNA or RNA, representing the genetic information of an organism.

Gly-His-Lys

A tripeptide consisting of glycine, histidine, and lysine, which is often studied for its role in wound healing and other biological functions.

Codons

Sequences of three nucleotides in mRNA that code for specific amino acids during protein synthesis or signal the termination of protein elongation.

Codon Sequence

A specific sequence of three nucleotides in mRNA that specifies the addition of a particular amino acid to a protein chain during biosynthesis.