Use the Table for the Question(s)below

question 12

Multiple Choice

Use the table for the question(s) below.
Consider the following three individuals portfolios consisting of investments in four stocks:
-Assuming that the risk-free rate is 4% and the expected return on the market is 12%,then required return on Peter's portfolio is closest to:

• A)20%
• B)22%
• C)18%
• D)16%

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Definitions:

Conversion Premium

The additional cost over the current market value of a convertible security that an investor pays to have the option to convert it into a set number of shares.

Conversion Price

The predetermined price per share at which a convertible bond or preferred stock can be converted into common stock.

Current Price

The market value of a stock, bond, or commodity at which it can be bought or sold at a particular time.

Conversion Ratio

The number of shares an investor gets for converting a convertible security into common stock.