A Stock Has an Expected Return of 14

question 23

Multiple Choice

A stock has an expected return of 14.5 percent, the risk-free rate is 4 percent and the return on the market is 11 percent. What is this stock's beta?

• A) 1.5
• B) 3.0
• C) 1.05
• D) 0.94

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Definitions:

Net Sales

Net sales is the revenue from sales of goods or services after subtracting returns, allowances for damaged or missing goods, and discounts.

Inventory Available

The total quantity of goods a company has on hand for sale at any given time, including both finished goods and goods in production.

Current Asset

Assets that are expected to be converted into cash, sold, or consumed within one year or within the company’s normal operating cycle if longer.

Plant and Equipment

Plant and Equipment are long-term assets used in the operation of a business, not intended for resale, including machinery, buildings, and vehicles.