RBC Stock Has a Beta of 0

question 54

Multiple Choice

RBC stock has a beta of 0.85,while TD stock has a beta of 1.21.The risk-free rate is 1.5%,and the expected return on a portfolio with 50% weight in RBC and the remainder in TD is 9.74%.What is the market risk premium?

• A)7%
• B)9.5%
• C)8%
• D)8.2%
• E)7.2%

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Definitions:

Peritubular Capillaries

Tiny blood vessels that surround the tubules in the kidney, involved in reabsorption and secretion during urine formation.

Efferent Arteriole

A small blood vessel that leads away from the glomerulus of the kidney after filtration has occurred, playing a role in regulating blood pressure and filtration rate.

Cortical Radiate Vein

Veins within the kidney that transport blood away from the nephrons.

Transitional Epithelium

A type of epithelial tissue that can stretch and change shape, found mainly in the urinary system.