A Stock Has a Beta of 1

question 32

Multiple Choice

A stock has a beta of 1.24,an expected return of 13.68 percent,and lies on the security market line.A risk-free asset is yielding 2.8 percent.You want to create a $6,000 portfolio consisting of Stock A and the risk-free security such that the portfolio beta is 0.65.What rate of return should you expect to earn on your portfolio?

• A)8.50 percent
• B)9.16 percent
• C)9.33 percent
• D)9.41 percent
• E)9.56 percent

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Definitions:

Medial Preoptic Area

A region in the hypothalamus involved in regulating sexual behavior, temperature control, and sleep.

Amygdala

A region of the brain within the temporal lobes implicated in emotion processing, memory, and decision-making.

Lordosis

A natural curvature of the spine in the lower back or neck region, which can become excessively pronounced due to various conditions.

Dopamine

Dopamine is a neurotransmitter involved in many functions, including motivation, reward, attention, and the regulation of movement.