Consider the Single-Factor APT

question 10

Multiple Choice

Consider the single-factor APT. Stocks A and B have expected returns of 15% and 18%, respectively. The risk-free rate of return is 6%. Stock B has a beta of 1.0. If arbitrage opportunities are ruled out, stock A has a beta of

• A) 0.67.
• B) 1.00.
• C) 1.30.
• D) 1.69.
• E) 0.75.

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