Assume That a Security Is Fairly Priced and Has an Expected

question 132

Multiple Choice

Assume that a security is fairly priced and has an expected rate of return of 0.17.The market expected rate of return is 0.11 and the risk-free rate is 0.04.The beta of the stock is ___.

• A)1.25.
• B)1.86.
• C)1.
• D)0.95.
• E)none of the above.

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Definitions:

Cyano Substituent

A cyano substituent refers to a group containing a carbon triple-bonded to a nitrogen atom (-C≡N) attached to a molecular framework.

Aromatic Ring

A cyclic molecule with conjugated pi electrons that exhibits enhanced stability, typified by the benzene ring.

Deactivator

A chemical group or substituent attached to an aromatic ring that decreases its reactivity in electrophilic aromatic substitution reactions.

Friedel-Crafts Acylation

A chemical reaction that introduces an acyl group into an aromatic ring, facilitated by a Lewis acid catalyst, used in synthetic chemistry.