Suppose You Forecast That the Market Index Will Earn a Return

question 13

Multiple Choice

Suppose you forecast that the market index will earn a return of 15% in the coming year.Treasury bills are yielding 6%.The unadjusted β of Mobil stock is 1.30.A reasonable forecast of the return on Mobil stock for the coming year is _________ if you use a common method to derive adjusted betas.

• A)15.0%
• B)15.5%
• C)16.0%
• D)16.8%
• E)none of the above

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Definitions:

Economic Loss

Financial damages not directly resulting from physical harm to a person or property, such as lost profits or earning capacity.

Ethical Competition

The practice of competing fairly and ethically within a market, adhering to moral standards and avoiding practices that harm consumers or competitors.

Physical Contact

The act of touching or being in direct contact with someone or something.

Assaulted

Being subjected to a sudden, violent attack or an attempt to cause physical harm to another person.