Assume the Following Data for a Stock: Risk-Free Rate =

question 9

Multiple Choice

Assume the following data for a stock: Risk-free rate = 4%; Factor-1 beta = 1.5; Factor-2 beta = 0.5; Factor-1 risk-premium = 8%; Factor-2 risk-premium = 2%.Calculate the expected rate of return on the stock using a two-factor APT model.

• A)14%
• B)17%
• C)10%
• D)13%

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Definitions:

Homogeneous

Characterized by uniformity or similarity, often referring to populations, substances, or areas with little diversity.

Apache Indians

A group of culturally related Native American tribes located in the Southwestern United States, known for their rich cultural heritage and history.

Participant Observation

In ethnography, the technique of learning a people's culture through social participation and personal observation within the community being studied, as well as interviews and discussion with individual members of the group over an extended period of time.

Etiquette

The set of rules or customs that guide acceptable social behavior in a particular group or culture.