You Determine That XYZ Common Stock Has an Expected Return

question 66

Multiple Choice

You determine that XYZ common stock has an expected return of 24%.XYZ 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 XYZ stock and its price will rise.
• B) You and other investors will sell XYZ stock and its return will fall.
• C) You and other investors will buy up XYZ stock and its return will rise.
• D) You and other investors will sell XYZ stock and its price will fall.

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Definitions:

Gainful Employment Rule

A regulation designed to ensure that education programs prepare students for gainful employment in a recognized occupation.

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