Stock a Has a Required Return of 19 Percent

question 104

Multiple Choice

Stock A has a required return of 19 percent. Stock B has a required return of 11 percent. Assume a risk-free rate of 4.75 percent. By how much does Stock A's risk premium exceed the risk premium of Stock B?

• A) 3.25 percent
• B) 6.25 percent
• C) 8.00 percent
• D) 7.00 percent

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Definitions:

Economic Well-Being

Economic well-being refers to the degree of prosperity, financial security, and the ability to meet basic needs, enjoyed by an individual, group, or society.

Low-Income Earners

Individuals who receive earnings that are significantly lower than the average for their community or country, often leading to financial struggles and limited access to resources.

High-Income Earners

Individuals or households that earn a significantly higher income than the average or median for a particular region or society.

Lobbies

Groups of people or organizations that seek to influence political decisions and policies, typically by engaging with legislators or members of government.