Stock X Has a Standard Deviation of 25 Percent and a Correlation

question 39

Multiple Choice

Stock X has a standard deviation of 25 percent and a correlation coefficient of 0.7 with market returns.The expected return of the market is 12 percent with a standard deviation of 15 percent.The risk-free rate is 5 percent.What is the required return of Stock X?

• A) 7.94%
• B) 9.56%
• C) 13.17%
• D) 15.28%

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