Assume a One-Factor Model Where the Factor Is Associated with the Overall

question 15

Multiple Choice

Assume a one-factor model where the factor is associated with the overall market.Suppose JSC's common stock has a factor beta of .8,the risk-free rate is 3.2 percent,and the expected market rate of return is 11.2 percent.What is the expected return for JSC stock?

• A)10.25 percent
• B)6.40 percent
• C)7.20 percent
• D)9.60 percent
• E)12.16 percent

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Definitions:

Lacunae

Small spaces or cavities within bone or cartilage tissue that house cells, such as osteocytes in bones.

Osteocytes

Mature bone cells embedded within the bone matrix that play a key role in maintaining bone tissue.

Myelin

A fatty substance that surrounds and insulates the axons of some neurons, facilitating the rapid transmission of electrical impulses.