Suppose Binder Corporation's Common Stock Has an Actual Return of 12.34

question 24

Multiple Choice

Suppose Binder Corporation's common stock has an actual return of 12.34 percent compared to its expected return of 12.6 percent.The risk-free rate was expected to be 4.3 percent,which it was.The beta of F_i is .9 and the beta of F_GNP is 1.1.If inflation unexpectedly increased by 1.4 percent,what was the unexpected change in GNP?

• A)2.02 percent
• B)1.38 percent
• C)−.82 percent
• D)−1.38 percent
• E)−2.02 percent

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Definitions:

Commerce Clause

A provision in the U.S. Constitution that grants Congress the power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.

Growth of National Power

The increase in strength and influence of a nation’s government over time, often in terms of political, economic, or military capacity.

U.S. Constitution

The foundational document of the United States, outlining the framework of government, rights of citizens, and laws of the land.

American Federalism

A political system in which power is divided between a central authority and constituent political units (states), allowing both to enact laws within their respective areas of responsibility.