A Stock Has an Expected Return of 11 Percent, the Risk-Free

question 13

Multiple Choice

A stock has an expected return of 11 percent, the risk-free rate is 6.1 percent, and the market risk premium is 4 percent. What is the stock's beta?

• A)1.18
• B)1.23
• C)1.29
• D)1.32
• E)1.35

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Definitions:

Bowed-out

A term often used to describe a production possibility frontier that is concave from the origin, indicating increasing opportunity costs as more of one good is produced.

Adaptability

Adaptability is the ability to adjust readily to different conditions, environments, or situations, often considered a crucial skill in both personal and professional contexts.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.), assuming all resources are fully utilized.

Production Possibilities Frontier

A graph that shows the combinations of two goods the economy can possibly produce given the available resources and technology.