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:

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Competitive

A state of being in which entities vie against each other to achieve a goal, such as market dominance or winning a contest.

Profit-Maximizing

The process or strategy of adjusting operations and resources to achieve the highest possible profit.

Market Wage

The prevailing wage rate in a labor market for a given skill set, determined by supply and demand forces.