White Company Stock Has a Beta of 2 and a Required

question 93

Multiple Choice

White Company stock has a beta of 2 and a required return of 23%,while Black Company stock has a beta of 1.0 and a required return of 14%.The standard deviation of returns for White Company is 10% more than the standard deviation for Black Company.The risk-free rate of return according to the CAPM is

• A) 4%.
• B) 5%.
• C) 6%.
• D) impossible to determine with the information given.

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Definitions:

School-Age Child

A child who is in the age range of attending primary or elementary school, approximately 6 to 12 years old.

Major Depressive Disorder

A mental disorder characterized by at least two weeks of pervasive sadness or loss of interest in nearly all activities, along with other symptoms such as feelings of worthlessness or excessive guilt, changes in sleep or appetite, or thoughts of death.

Nonverbal Communication

The transfer of information through body language, facial expressions, gestures, and other physical cues rather than words.

African-American

A term used to refer to individuals in the United States with African ancestry or who identify as having cultural, historical, or genealogical ties to Africa.