Stock X Has a Beta of

question 33

Multiple Choice

Stock X has a beta of .95 and an expected return of 10.8 percent.Stock Y has a beta of 1.2 and an expected return of 13.1 percent.What is the risk-free rate of return assuming that both stock X and stock Y are correctly priced?

• A)1.10 percent
• B)1.20 percent
• C)2.06 percent
• D)3.30 percent
• E)3.50 percent

---

Definitions:

Principal

The original amount borrowed or invested.

Payments 13 to 24

Refers to the series of payments that are made from the thirteenth to the twenty-fourth installment in a sequence of payments.

Compounded Monthly

The process of adding interest to a principal amount each month, where each month's interest is computed based on the total of the original principal and the accumulated interest.

Home Improvement Loan

A type of loan intended to finance the renovation or repair of a home.