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:

Inferiority Complex

A psychological condition in which a person feels a deep sense of inadequacy and lacking in comparison to others.

Oral Fixation

A fixation in the oral stage of development, resulting in an obsession with oral activities.

Electra Complex

A psychoanalytic theory that suggests a girl's psychosexual competition with her mother for possession of her father.

Neo-Freudians

Describes psychologists and psychoanalysts who followed Freud but diverged in their theories, emphasizing social and cultural factors over innate biological drives.