Stock X Has a Beta of

question 43

Multiple Choice

Stock X has a beta of .87 and an expected return of 9.8 percent. Stock Y has a beta of 1.2 and an expected return of 13.1 percent. What is the risk-free rate of return assuming that both stock X and stock Y are correctly priced?

• A) 1.10 percent
• B) 1.20 percent
• C) 2.07 percent
• D) 3.30 percent
• E) 3.50 percent

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Definitions:

Traditional Quality Assurance

Conventional methods and procedures designed to ensure that products or services meet specific quality standards prior to their delivery.

Culture of Safety

An organizational work environment where safety concerns can be raised openly, and mistakes lead to learning rather than punishment.

Process Teams

Process teams are groups of individuals who work together specifically to analyze, manage, and improve business processes and workflows within an organization.

Day-To-Day Operations

The regular activities and routines that a business or organization conducts on a daily basis to maintain its function.