A Stock Has an Expected Return of 9

question 89

Multiple Choice

A stock has an expected return of 9.5 percent, the risk-free rate is 2 percent and the return on the market is 8 percent. What is this stock's beta?

• A) 1.50
• B) 1.25
• C) 1.19
• D) 0.94

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Definitions:

Unsecured Creditors

Creditors who have extended credit without any specific collateral, making them more vulnerable in the event of the debtor's insolvency.

Direct Bankruptcy Costs

Expenses directly associated with the process of filing for bankruptcy, including legal fees, accounting fees, and other related costs.

Corporate Default

Occurs when a company fails to meet its legal obligations or promises, especially regarding the repayment of its debts.

Legal Expenses

Costs incurred by a business or individual for legal services, including lawyer fees, court fees, and other expenses related to legal processes.