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

---

Definitions:

Bailment

The legal relationship arising when one person (the bailor) gives possession of an object to another person (the bailee) under the agreement that it will be returned or otherwise disposed of according to the direction of the bailor.

Bailment Relationship

A legal relationship in which physical possession of personal property is transferred from one party to another for a specific purpose, while ownership remains with the original party.

Negligent

Failure to take proper care in doing something, leading to damage or injury to others.