A Stock Has an Expected Return of 14

question 23

Multiple Choice

A stock has an expected return of 14.5 percent, the risk-free rate is 4 percent and the return on the market is 11 percent. What is this stock's beta?

• A) 1.5
• B) 3.0
• C) 1.05
• D) 0.94

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Definitions:

Compound Instruments

Financial instruments that contain both a liability and equity element, requiring separation for accounting purposes.

Liability

A financial obligation or debt owed by a company to another entity, payable in the future.

Legally Enforceable

Describes a contract or agreement that is binding under law and can be upheld in a court.

Future Transfer

A financial arrangement or transaction planned to be executed at a future date.