White Company Stock Has a Beta of 2 and a Required

question 131

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:

D-Train Combination

Refers to a specific configuration of linked railway or road vehicles, typically for the efficient transportation of goods or passengers.

Points Of Articulation

The specific locations at which parts of an articulated object (like a toy or a robotic arm) can bend or rotate.

Wiring Gauge

A measurement of the diameter of electrical wire, determining its current-carrying capacity and resistance.

Operating Load

The average workload or stress placed on a machine or system during normal operation.