Stock J Has a Beta of 1

question 53

Multiple Choice

Stock J has a beta of 1.47 and an expected return of 15.8 percent.Stock K has a beta of 1.05 and an expected return of 11.9 percent.What is the risk-free rate if these securities both plot on the security market line?

• A)2.15 percent
• B)3.34 percent
• C)3.88 percent
• D)4.41 percent
• E)4.68 percent

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Definitions:

Total Cost

The complete cost of production or operation, combining both fixed and variable expenses.

Sales Data

Quantitative information regarding the number of products or services sold within a specific time period, often used for analysis and forecasting.

Excel Scenario Manager

A tool within Microsoft Excel that allows users to create and analyze multiple scenarios based on varying sets of assumptions to forecast different outcomes.