The Common Stock of Flavorful Teas Has an Expected Return

question 48

Multiple Choice

The common stock of Flavorful Teas has an expected return of 14.4%.The return on the market is 10% and the risk-free rate of return is 2.5%.What is the beta of this stock?

• A).65
• B)1.09
• C)1.32
• D)1.59
• E)1.68

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Definitions:

Deductibles

In insurance, the amount that the insured must pay out-of-pocket before the insurance company pays its share of the expenses.

Health Insurance

A form of insurance coverage that pays for medical and surgical expenses incurred by the insured, often provided by employers or purchased individually.

Adverse Selection

A situation where asymmetry of information results in high-risk individuals being more likely to participate in an agreement or market, leading to an inefficient outcome.