Use the Information for the Question(s)below

question 90

Multiple Choice

Use the information for the question(s) below.
Suppose that in the coming year,you expect Exxon-Mobil stick to have a volatility of 42% and a beta of 0.9,and Merck's stock to have a volatility of 24% and a beta of 1.1.The risk free interest rate is 4% and the market's expected return is 12%.
-Which stock has the highest total risk?

• A)Merck since it has a lower volatility
• B)Merck since it has a higher Beta
• C)Exxon-Mobil since it has a higher volatility
• D)Exxon-Mobil since it has a lower beta

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Definitions:

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Depreciation

The reduction in value of tangible assets over time due to use and wear and tear.

Equipment

Durable goods used in operations, such as machinery and office hardware.

Equipment Purchase

The acquisition of physical assets such as machinery or office equipment that a business uses in its operating activities.