You Own a Stock That You Think Will Produce a Return

question 43

Multiple Choice

You own a stock that you think will produce a return of 11 percent in a good economy and 3 percent in a poor economy.Given the probabilities of each state of the economy occurring,you anticipate that your stock will earn 6.5 percent next year.Which one of the following terms applies to this 6.5 percent?

• A)arithmetic return
• B)historical return
• C)expected return
• D)geometric return
• E)required return

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Definitions:

Estrogen

A group of steroid hormones that play a key role in the development and regulation of the female reproductive system and secondary sex characteristics.

Cortisol

The primary stress hormone; fluctuations in the body’s cortisol level affect human emotions.

Lipid

A class of organic compounds that are fatty acids or their derivatives and are insoluble in water but soluble in organic solvents. They are used by the body for energy storage and structural functions.

Lymphoid System

Part of the immune system, composed of structures and cells like lymph nodes and lymphocytes that help protect the body from infection and disease.