A Stock Has a Beta of 1

question 48

Multiple Choice

A stock has a beta of 1.58 and an expected return of 16.2 percent.The risk-free rate is 3.8 percent.What is the market risk premium?

• A) 7.85 percent
• B) 10.01 percent
• C) 11.72 percent
• D) 12.50 percent
• E) 13.40 percent

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Definitions:

Activity Variance

The difference between what was expected to be spent on an activity and what was actually spent, often analyzed in budgeting and cost management.

Cost Formula

A mathematical equation or model used to determine the total cost of production or service by considering various cost drivers and fixed and variable costs.

Vehicle Operating Cost

The recurring expenses associated with using a vehicle, including fuel, maintenance, insurance, and depreciation.

Snow-Day

Typically refers to a day on which work or school is canceled due to excessive snowfall or hazardous weather conditions.