Stock a Has a Beta of

question 48

Multiple Choice

Stock A has a beta of .68 and an expected return of 8.1 percent.Stock B has a beta of 1.42 and an expected return of 13.9 percent.Stock C has beta of 1.23 and an expected return of 12.4 percent.Stock D has a beta of 1.31 and an expected return of 12.6 percent.Stock E has a beta of .94 and an expected return of 9.8 percent.Which one of these stocks is the most accurately priced if the risk-free rate of return is 2.5 percent and the market risk premium is 8 percent?

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

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Definitions:

Gift Inter Vivos

A gift made during the giver's lifetime, as opposed to a bequest or legacy left in a will.

Birthday Gift

An item or service given to someone on the occasion of their birthday without expectation of payment.

Inherits

To receive property, titles, or rights from a deceased person's estate according to a will or as determined by law.

Lost Property

Items that are unintentionally left by their owner at a place where they are not likely to be found.