Stock a Has a Beta of

question 26

Multiple Choice

Stock A has a beta of .69 and an expected return of 9.27 percent.Stock B has a beta of 1.13 and an expected return of 11.88 percent.Stock C has a beta of 1.48 and an expected return of 15.31 percent.Stock D has a beta of .71 and an expected return of 8.79 percent.Lastly,Stock E has a beta of 1.45 and an expected return of 14.04 percent.Which one of these stocks is most accurately priced if the risk-free rate of return is 3.6 percent and the market rate of return is 10.8 percent?

• A)Stock A
• B)Stock B
• C)Stock C
• D)Stock D
• E)Stock E

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Definitions:

Self-Installed

Refers to equipment or software that is designed to be set up or installed by the end-user, without the need for professional assistance.

Process Innovation

The development and implementation of new or improved production or delivery methods, significantly enhancing efficiency or quality.

Process Innovation

The introduction of new or significantly improved methods, practices, or techniques in the creation and delivery of goods and services.

Ready To Assemble

Refers to furniture or other goods sold in a flat-pack form, which require the customer to assemble the product themselves.