There Is a 35 Percent Probability That a Particular Stock

question 86

Multiple Choice

There is a 35 percent probability that a particular stock will earn a 16 percent return and a 65 percent probability that it will earn 10 percent.What is the risk-free rate if the risk premium on the stock is 7.5 percent?

• A) 4.20 percent
• B) 4.60 percent
• C) 5.20 percent
• D) 5.40 percent
• E) 5.80 percent

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Definitions:

Family

A social group typically bound by ties of blood, marriage, or adoption; it provides members with emotional and economic support.

Cultural Syndrome

Patterns of behaviors, beliefs, and values that are characteristic and recognizable within a specific culture or society.

Honor

A principle that involves respect and admiration, often associated with upholding one's moral values and integrity.

Appear Fierce

To display a visually intimidating or aggressive demeanor.