Suppose You Forecast That the Market Index Will Earn a Return

question 19

Multiple Choice

Suppose you forecast that the market index will earn a return of 12% in the coming year.Treasury bills are yielding 4%.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)14.6%
• E)none of the above

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Definitions:

State Characteristics

Temporary attributes or conditions of an individual that can change depending on circumstances, unlike more stable trait characteristics.

Minnesota Multiphasic

Refers to the Minnesota Multiphasic Personality Inventory (MMPI), a standardized psychometric test of adult personality and psychopathology.

Personality Assessment Inventory

A standardized psychological test designed to evaluate personality and psychopathology of individuals.

Clinical Scales

Tools used in psychological and medical assessments to measure the severity or presence of various symptoms or conditions.