A Stock Has a Beta of 1

question 48

Multiple Choice

A stock has a beta of 1.58 and an expected return of 16.2 percent.The risk-free rate is 3.8 percent.What is the market risk premium?

• A) 7.85 percent
• B) 10.01 percent
• C) 11.72 percent
• D) 12.50 percent
• E) 13.40 percent

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Definitions:

SAT Scores

SAT Scores are standardized test results used for college admissions in the United States, assessing mathematical, reading, and writing skills.

Standard Deviation

A measure of dispersion or variability that quantifies how much individual data points deviate from the mean of a dataset.

Normally Distributed

Referring to a bell-shaped curve distribution where data are symmetrically distributed around the mean, implying most data points are close to the mean and fewer are near the extremes.

Automobile Battery

A rechargeable battery that supplies electrical energy to a motor vehicle, primarily used for starting the engine and powering accessories.