Dinner Foods Stock Has a Beta of 1

question 79

Multiple Choice

Dinner Foods stock has a beta of 1.45 and an expected return of 13.43 percent.Edwards' Meals stock has a beta of .95 and an expected return of 10.27 percent.Assume that both stocks are correctly priced.Given this,the risk-free rate is ________ percent and the market rate of return is ________ percent.

• A) 4.02; 11.53
• B) 4.09; 12.35
• C) 4.10; 11.53
• D) 4.27; 10.59
• E) 4.41; 10.25

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Definitions:

Asset Account

An account that represents a tangible or intangible item of value owned by a company, such as cash, inventory, or equipment.

Revenue Account

An account that records the income earned from normal business operations, such as sales of goods or services.

Liability Account

An account recording a company's debts or obligations arising from past transactions or events.

Posting

Posting is the process of recording financial transactions from the journal to the respective ledger accounts, providing a detailed account of all business operations.