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:

Grinding Department

A production segment within a manufacturing facility where materials are ground, refined, or processed.

FIFO Method

A method of inventory valuation where the first items purchased or produced are assumed to be the first sold, known as First-In, First-Out.

Conversion Costs

The costs of converting raw materials into finished goods, including labor and overhead expenses.

Mixing Department

A specific stage or location in the manufacturing process where ingredients or components are combined to produce a product.