A Stock Has an Expected Return of 14

question 34

Multiple Choice

A stock has an expected return of 14.59 percent and a beta of 1.35.What is the risk-free rate if the market rate is 12.7 percent?

• A)6.48 percent
• B)6.92 percent
• C)7.01 percent
• D)7.30 percent
• E)7.90 percent

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Definitions:

Lightbulb

A device that emits light when an electrical current passes through it, available in various types for differing lighting applications.

Dead Short

An electrical fault characterized by a direct current path that allows a surge of electrical current, potentially causing damage or fire.

Circuit Resistance

A measure of the opposition that a circuit presents to the flow of electric current, typically expressed in ohms.

Capacitance

The ability of a system to store an electric charge, measured in Farads, and is an electrical characteristic of a capacitor.