A Stock Has an Expected Return of 17

question 58

Multiple Choice

A stock has an expected return of 17.2 percent and a beta of 1.59. The risk-free rate is 5.1 percent. What is the slope of the security market line?

• A) 7.55 percent
• B) 7.61 percent
• C) 7.78 percent
• D) 7.92 percent
• E) 8.03 percent

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Definitions:

Low-Income

Referring to individuals or families whose earnings are significantly lower than the average, often quantified by government standards.

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.

Proportional Tax

A tax system where the tax rate remains constant regardless of the amount subject to tax, meaning everyone pays the same percentage of their income.

Progressive Tax

A tax system where the tax rate increases as the taxable amount increases, burdening wealthier individuals more.