Dinner Foods Stock Has a Beta of 1

question 50

Multiple Choice

Dinner Foods stock has a beta of 1.55 and an expected return of 15.43 percent. Edwards' Meals stock has a beta of .95 and an expected return of 10.27 percent. Assume that both stocks are correctly priced. Given this, the risk-free rate is _____ percent and the market rate of return is _____ percent.

• A) 2.02; 11.53
• B) 2.09; 12.35
• C) 2.10; 11.53
• D) 2.26; 12.35
• E) 2.10; 10.70

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Definitions:

Internal Locus of Control

A belief system wherein individuals feel that they have control over the outcomes of events in their lives, as opposed to external forces.

Type B Personality

A personality type characterized by a less competitive, more relaxed, and less stressed-out demeanor compared to Type A Personality.

Internal Locus of Control

The belief that one is in control of their life and outcomes, as opposed to external forces having that control.

External Locus of Control

An external locus of control refers to the belief that one's successes or failures result from external factors beyond one's control, rather than one's own efforts.