Suppose That Gold Digger's Beta Is -0

question 102

Multiple Choice

Suppose that Gold Digger's beta is -0.8.If the market risk premium is 8% and the risk-free interest rate is 4%,then the expected return for Gold Digger's stock is?

• A)-2.4%
• B)4.8%
• C)2.4%
• D)10.4%

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Definitions:

Negative Externalities

Costs suffered by a third party due to an economic transaction that they were not directly involved in, often leading to market failure.

Social Cost

The total cost to society as a whole, including both the private costs borne by individuals and the external costs to others not involved in the transaction.

Private Costs

The costs that are incurred by an individual or a company when producing goods or services.

Bystanders

Individuals who are present at an event or incident but do not take part in it, often discussed in the context of emergency situations or accidents.