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

---

Definitions:

Inventory Levels

The quantity of goods or materials on hand at any given time within a business, critical for meeting customer demand and operational efficiency.

Grid Technique

A strategic planning tool used to evaluate and prioritize ideas or options by placing them on a grid based on two criteria.

Geographic Grid

A system of imaginary lines (latitude and longitude) that are used to pinpoint locations on the surface of the Earth.