Use the Table for the Question(s)below

question 57

Multiple Choice

Use the table for the question(s) below.
-Suppose a risky security pays an average cash flow of $100 in one year.The risk-free rate is 5%,and the expected return on the market index is 13%.If the returns on this security are high when the economy is strong and low when the economy is weak,but the returns vary by only half as much as the market index,then the price for this risky security is closest to:

• A)$88.
• B)$92.
• C)$93.
• D)$95.

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Definitions:

Executive Action

Decisions or measures taken by an executive branch of government, including the President or executives within organizations, often involving policy enforcement or implementation.

Forecasting

Forecasting is the process of making predictions about future events or trends based on current and historical data analysis, widely used in fields such as economics, weather, and business planning.

Environmental Changes

Alterations in the surrounding conditions, including social, economic, political, and natural environments that can impact organizations and individuals.

Buffering

The act of minimizing or preventing the negative effects of a problem, stress, or challenge by intervening in a protective or mitigating manner.