A Stock Is Expected to Return 13 Percent in an Economic

question 13

Multiple Choice

A stock is expected to return 13 percent in an economic boom, 10 percent in a normal economy, and 3 percent in a recessionary economy.Which one of the following will lower the overall expected rate of return on this stock?

• A)An increase in the rate of return in a recessionary economy
• B)An increase in the probability of an economic boom
• C)A decrease in the probability of a recession occurring
• D)A decrease in the probability of an economic boom
• E)An increase in the rate of return for a normal economy

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Definitions:

Needs Contract

A contract or agreement tailored to address and fulfill specific needs of the parties involved.

Good Faith

Acting with honest intentions without seeking to take unfair advantage in a transaction or situation.

Rule Of Requirements

A principle in contract law that dictates a seller must supply only the quantity of goods that a buyer requires, no less and no more.

Triple

Multiplication by three or having three parts; in some contexts, it may refer to a rating, niveau, or layer that is three times stronger, higher, or more intense.