Stock a Has a Required Return of 12 Percent

question 17

Multiple Choice

Stock A has a required return of 12 percent. Stock B has a required return of 15 percent. Assume a risk-free rate of 4.75 percent. Which of the following is a correct statement about the two stocks?

• A) Stock A is riskier.
• B) Stock B is riskier.
• C) The stocks have the same risk.
• D) We would need to know if the markets are efficient to answer this question.

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Definitions:

Maladaptive

Behaviors or thought patterns that are counterproductive to an individual's wellbeing or adaptation to their environment.

Stresses

States of mental or emotional strain or tension resulting from adverse or demanding circumstances.

Everyday Demands

The regular pressures and requirements of daily living that individuals need to manage or satisfy.

DSM

The Diagnostic and Statistical Manual of Mental Disorders, a comprehensive classification of officially recognized psychiatric disorders, used by healthcare professionals in the U.S. and other countries.