A Stock's Beta Is Estimated to Be 1

question 32

Multiple Choice

A stock's beta is estimated to be 1.3. The risk-free rate is 5 percent, and the market return is expected to be 9 percent. What is the expected return on the stock based on the CAPM?

• A)5.2 percent
• B)11.7 percent
• C)16.7 percent
• D)4 percent
• E)10.2 percent

Understand the role and structure of accounts in financial accounting.

Grasp the purpose and content of a chart of accounts.

Learn how to classify accounts in the ledger and understand their order of presentation in financial statements.

Understand the components and increase/decrease effects on stockholders' equity accounts.

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Definitions:

Total Assets

The sum of all assets owned by a company, including current, fixed, tangible, and intangible assets, represented on the balance sheet.

Total Equity

Total equity represents the value left for shareholders after all liabilities have been subtracted from the total assets of a company.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets, indicating the leverage and financial health of the company.

Total Assets

The sum of all assets owned by a company, including current, fixed, and intangible assets, indicating the total resources.