Suppose You Forecast That the Market Index Will Earn a Return

question 43

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 1.50. 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) 14.7%

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Definitions:

Quick Ratio

An assessment of a firm's capacity to fulfill its immediate liabilities using its most convertible assets, excluding stock.

Source Of Cash

Various origins from which a company or individual can acquire cash, including operations, financing, and investing activities.

Accounts Payable

Monetary obligations a company has to its suppliers for items bought on credit, intended to be paid within a short period.

Inventory

The total stock of goods and materials held by a company, intended for sale or used in production.