You Determine That LMN Common Stock Has an Expected Return

question 10

Multiple Choice

You determine that LMN common stock has an expected return of 24%.LMN has a Beta of 1.5.The risk-free rate is 5%,and the market expected return is 15%.Which of the following is most likely to happen?

• A) You and other investors will buy up LMN stock and its price will rise.
• B) You and other investors will sell LMN stock and its return will fall.
• C) You and other investors will buy up LMN stock and its return will rise.
• D) You and other investors will sell LMN stock and its price will fall.

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Definitions:

Gastrocnemius

A major muscle located in the back part of the lower leg, involved in walking, running, and jumping.

Calf

The muscular back part of the lower leg between the knee and ankle, or a young bovine animal.

Leg

A limb on a human or animal's body that supports movement and weight, extending from the hip to the foot.

Contracts

Legally binding agreements between two or more parties that outline obligations, rights, and terms to which the parties have agreed.