What Rate of Return Should an Investor Expect for a Stock

question 58

Multiple Choice

What rate of return should an investor expect for a stock that has a beta of 1.25 when the market is expected to yield 14% and Treasury bills offer 6%?

• A) 10.0%
• B) 11.2%
• C) 12.4%
• D) 16.0%

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Definitions:

Price Discrimination

The act of selling the same quantity of the same product to different buyers at different prices.

Promotional Allowances

A reduction in price or the provision of added value in goods or services given to retailers or customers, often as an incentive for bulk purchases or promotional activities.

Customer Discrimination

The unfair or prejudicial treatment of customers based on personal characteristics, rather than on the merit of the customer or the customer's needs.

Minimizing Union Control

Strategies or practices implemented by companies to reduce the influence and power of labor unions in workplace decisions and policies.