What Rate of Return Should an Investor Expect for a Stock

question 35

Multiple Choice

What rate of return should an investor expect for a stock that has a beta of 0.8 when the market is expected to yield 14% and Treasury bills offer 6%?

• A) 9.2%
• B) 11.2%
• C) 12.4%
• D) 12.8%

---

Definitions:

Long-Lived Assets

Assets that are expected to provide economic benefits to a company over a period longer than one year, such as buildings, machinery, and land.

Physical Substance

A characteristic referring to tangible assets which have a physical form and presence, as opposed to intangible assets like patents or copyrights.

Intangible Assets

Non-physical assets that have a value to the company, such as intellectual property, brand recognition, and goodwill.

Current Liabilities

Short-term financial obligations a company owes and is expected to pay within one year or within its operating cycle.