The Stock of Big Joe's Has a Beta of 1

question 64

Multiple Choice

The stock of Big Joe's has a beta of 1.38 and an expected return of 16.26 percent.The risk-free rate of return is 3.42 percent.What is the expected return on the market?

• A)7.60 percent
• B)8.04 percent
• C)9.30 percent
• D)12.72 percent
• E)12.16 percent

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Definitions:

Valid Argument

A logical sequence of statements where if the premises are true, the conclusion must also be true.

Prejudged

To make a decision or form an opinion about something or someone in advance, without sufficient evidence or through bias.

Worthy of Friendship

A term used to describe individuals or entities that possess qualities making them desirable or valuable as friends.

Virtuous

Having or showing high moral standards, including traits such as integrity, courage, and honesty.