Use the Security Market Line to Determine the Required Rate

question 63

Multiple Choice

Use the security market line to determine the required rate of return for the following firm's stock.The firm has a beta of 1.25,the required return in the market place is 10.50%,the standard deviation of returns for the market portfolio is 25.00%,and the standard deviation of returns for your firm is also 25.00%.

• A)13.13%
• B)10.50%
• C)31.25%
• D)There is not enough information to answer this question.

---

Definitions:

Thalamus

A neural structure serving as a conduit for signal transmission of sensory data to the cerebral cortex.

Optimal Level

Optimal level refers to the most favorable point or degree of something for achieving a specific result or condition.

Arousal

A physiological and psychological state of being awake or reactive to stimuli, often associated with increased activity in the nervous system.

Task Performance

Refers to the effectiveness and efficiency with which an individual completes a given task or series of tasks.