If Left Bank Stock Has a Beta of 1

question 69

Multiple Choice

If Left Bank stock has a beta of 1.25,the return from the market portfolio is 15%,and the Treasury bill return is 5%,what is the required return from the stock?

• A) 17.5%
• B) 12.5%
• C) 16.0%
• D) 7.5%
• E) 15.0%

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Definitions:

The Song of Love

A painting by Giorgio de Chirico in 1914, showcasing the metaphysical art style.

Surrealism

A successor to Dada, Surrealism incorporated the improvisational nature of its predecessor into its exploration of the ways to express in art the world of dreams and the unconscious. Biomorphic Surrealists, such as Joan Miró, produced largely abstract compositions. Naturalistic Surrealists, notably Salvador Dalí, presented recognizable scenes transformed into a dream or nightmare image.

Indifference Curve

An indifference curve is a graph that shows a combination of two goods that give a consumer equal satisfaction and utility, indicating preferences irrespective of consumption mix.

Slope

A measure of the steepness or inclination of a line, indicating the change in the vertical axis relative to the change in the horizontal axis.