Overton Markets Stock Has an Expected Return of 7

question 47

Multiple Choice

Overton Markets stock has an expected return of 7.8 percent and betas of: β_GNP = 1.06; β_I = 1.01; and β_Ex = .52.This expectation is based on a three-factor model with expected values of: GNP growth of 2.6 percent; inflation of 3.1 percent; and export growth of 1.4 percent.However,actual growth in these factors turns out to be 3.1 percent,2.6 percent,and .2 percent,respectively.Calculate the stock's total return if the company unexpectedly announces that an important patent filing has been granted sooner than expected and will earn the company 5 percent more in return,(i.e.from 10 percent up to 15 percent) .

• A)16.02 percent
• B)12.20 percent
• C)11.55 percent
• D)10.90 percent
• E)11.02 percent

---

Definitions:

Milgram Obedience

Milgram Obedience Experiment was a series of psychological experiments conducted by Stanley Milgram, which measured the willingness of study participants to obey an authority figure who instructed them to perform acts conflicting with their personal conscience.

Electric Shock

A sudden discharge of electricity through a part of the body, causing injury or muscular contraction.

Memory

The cognitive process enabling humans to encode, store, retain, and subsequently retrieve information and past experiences.

Belmont Report

A foundational document in the ethics of human subjects research, outlining key principles including respect for persons, beneficence, and justice.