What Is the Risk-Free Rate If There Is a Stock

question 61

Multiple Choice

What is the risk-free rate if there is a stock with a risk premium of 9.5 percent and the return of the stock is 19.9 percent?

• A) 29.4%
• B) 10.4%
• C) 2.1%
• D) 8.7%
• E) 12.5%

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Definitions:

Shortage

A condition where the market's demand for a good or service outstrips its supply.

Price System

An economic mechanism wherein prices act as signals for the allocation of resources, influencing both producers and consumers in their decisions.

Buyers

Individuals or organizations that purchase goods or services for personal use, resale, or production of other goods and services.

Sellers

Individuals or entities that offer goods or services in exchange for financial compensation.