What Is the Expected Return of a Stock with a Risk

question 17

Multiple Choice

What is the expected return of a stock with a risk premium of 7.6 percent if the risk-free rate is 4.8 percent?

• A) 12.4%
• B) 13.1%
• C) 11.3%
• D) 2.8%
• E) 11.7%

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Definitions:

Highly Skilled

Refers to workers who have obtained a high level of training, expertise, or experience in their respective fields.

Optimal Quantity

Optimal quantity is the amount of a good or service that maximizes a firm's profits or an individual's utility, considering costs and benefits.

Weaker Economy

An economy characterized by slower growth, lower productivity, and potentially higher unemployment rates compared to a stronger economy.

Unemployment Rates

The percentage of the labor force that is jobless and actively seeking employment.