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

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Definitions:

Auscultates

The act of listening to the internal sounds of the body, typically using a stethoscope, to assess the condition of organs or detect abnormalities.

Apical Pulse

Heartbeat as listened to with the bell or diaphragm of a stethoscope placed on the apex of the heart.

Critical Thinking Skill

The ability to actively and skillfully conceptualize, apply, analyze, synthesize, and evaluate information to reach an informed conclusion.

Clinical Decisions

The judgment and determinations made by healthcare professionals in the context of clinical care, based on a patient's health information and treatment options.