Stock X Has a Beta of 0

question 31

Multiple Choice

Stock X has a beta of 0.87 and an expected return of 10.4%. Stock Y has a beta of 1.1 and an expected return of 12.2%. What is the risk-free rate of return assuming that both Stock X and Stock Y are correctly priced?

• A) 2.50%
• B) 4.38%
• C) 3.59%
• D) 3.94%
• E) 3.09%

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Definitions:

Geert Hofstede

A Dutch social psychologist who is known for his research on cross-cultural groups and organizations, particularly for developing cultural dimensions theory.

National Culture

The set of shared values, beliefs, customs, and practices that characterize the people of a particular country or nation.

Impatience

A tendency to be quickly irritated or provoked by delays or obstacles.

Generalized Cultural Value

Broadly accepted cultural norms and values that transcend individual societies, serving as a guide for social behavior and expectations.