Stock X Has a Beta of 1

question 31

Multiple Choice

Stock X has a beta of 1.02 and an expected return of 11.8 percent.Stock Y has a beta of 1.15 and an expected return of 13.1 percent.What is the risk-free rate of return assuming that both stock X and stock Y are correctly priced?

• A) 1.10 percent
• B) 1.60 percent
• C) 2.06 percent
• D) 3.30 percent
• E) 3.50 percent

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Definitions:

Shareholders Approval

A formal consent given by shareholders, typically through voting, for certain actions or decisions proposed by a company's management.

Direct Purchase

The act of buying goods or services directly from the source, bypassing intermediaries.

Sweet

Usually pertaining to the taste perception of sugariness; not applicable as a key term without context. NO.

Tart

A type of baked dish usually consisting of a filling over a pastry base without a top crust, often sweetened with fruit or savory in flavor.