Which One of the Following Shares Is Correctly Priced If

question 88

Multiple Choice

Which one of the following shares is correctly priced if the risk-free rate of return is 3.6% and the market rate of return is 10.5%?
$\begin{array}{l}\begin{array}{|l|l|l|}\hlineShare &Beta &\text { Expected Return }\\\hline \mathrm{A} & .85 & 9.2 \% \\\hline \mathrm{B} & 1.08 & 11.8 \% \\\hline \mathrm{C} & 1.68 & 15.3 \% \\\hline \mathrm{D} & .71 & 7.8 \% \\\hline \mathrm{E} & 1.45 & 12.3 \% \\\hline\end{array}\end{array}$

• A)A
• B)B
• C)C
• D)D
• E)E

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Definitions:

Factor B

A variable or condition that is manipulated or varied in an experiment, considered distinct from other variables or conditions.

Levels

The distinct values or stages that a variable can take on within a dataset, often referring to categorical variables.

F-Ratio

A statistic that measures the ratio of the variance among the means of groups to the variance within each group.

Main Effect

The overall impact of an independent variable on a dependent variable in an experiment, analyzing the significant changes or differences.