Stock A's Stock Has a Beta of 1

question 26

Multiple Choice

Stock A's stock has a beta of 1.30, and its required return is 12.00%.Stock B's beta is 0.80.If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.)

• A) 8.76%
• B) 8.98%
• C) 9.21%
• D) 9.44%
• E) 9.68%

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Definitions:

Long-Term Disability

A condition that impacts one's ability to perform their usual work for an extended period.

Medications

Substances used to diagnose, treat, cure, or prevent diseases and ailments.

Psychotherapy

A treatment system in which words and acts are used by a client (patient) and therapist in order to help the client overcome psychological difficulties.

Antidepressant Drugs

Psychotropic drugs that improve the mood of people with depression.