Tall Stand Timber Stock Has an Expected Return of 17

question 81

Multiple Choice

Tall Stand Timber stock has an expected return of 17.3 percent. What is the risk-free rate if the risk premium on the stock is 12.4 percent?

• A) 4.90 percent
• B) 5.30 percent
• C) 5.67 percent
• D) 6.55 percent
• E) 7.17 percent

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Definitions:

Portfolio Management

The science and art of making decisions about investment mix and policy, matching investments to objectives, asset allocation, and balancing risk against performance.

Asset Value

The value of a company's assets, often used in determining its worth or the value of its shares.

Expected Excess Return

The additional return investors anticipate receiving on an investment over the risk-free rate as compensation for taking on higher risk.

Expected Return

The forecasted amount of profit or loss an investment is likely to generate over a given period.