A Stock Has a Beta of 1

question 15

Multiple Choice

A stock has a beta of 1.68, the expected return on the market is 14.72, and the risk-free rate is 4.65. What must the expected return on this stock be?

• A) 15.67 percent
• B) 16.75 percent
• C) 17.10 percent
• D) 18.46 percent
• E) 21.57 percent

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Definitions:

Approach

A method or way of dealing with a particular problem or task.

Experience

The knowledge or skill acquired by a person over time through direct participation in events or activities.

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The ability to think abstractly, reason, identify patterns, and solve novel problems, independent of acquired knowledge.

Work Stress

The strain or tension experienced by individuals due to demands and pressures of their occupational roles.