What Will Happen to the Expected Return on a Stock

question 79

Multiple Choice

What will happen to the expected return on a stock with a beta of 1.5 and a market risk premium of 9% if the Treasury bill yield increases from 3 to 5%?

• A) The expected return will remain unchanged.
• B) The expected return will increase by 1.0%.
• C) The expected return will increase by 2.0%.
• D) The expected return will increase by 3.0%.

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Definitions:

Doctrine of Consequentialism

This ethical doctrine judges the morality of an action based on its outcomes or consequences, emphasizing the greatest good for the greatest number.

Famous Philosopher

A renowned individual known for significant contributions to philosophy, including ethical, metaphysical, logical, and social theories.

Refined Version

A version that has been improved or made clearer for better understanding or effectiveness.

Hedonistic Calculus

A method proposed by utilitarian philosophers for calculating the moral rightness of an action based on the net pain or pleasure it produces.