Potash Corp Stock Has a Beta of 1

question 58

Multiple Choice

Potash Corp stock has a beta of 1.1,while Tim Horton's stock has a beta of 1.4.The risk-free rate is 1.9%,and the expected return on a portfolio with 30% weight in Potash and the remainder in Tim Horton's is 9.76%.What is the market risk premium?

• A)7%
• B)7.9%
• C)6%
• D)6.9%
• E)7.2%

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Definitions:

Core Principles

Fundamental beliefs or guidelines that form the foundation for a system, process, or strategy, often defining its purpose and direction.

Cooling-Off Law

A regulatory measure that allows consumers a specified period of time after a purchase to cancel a transaction without penalty, typically applied to door-to-door sales and other direct sales practices.

Door-to-Door Transactions

Sales or services provided through direct visitation to a customer's home or business location, typically involving personal interaction.

Green River Ordinance

This type of ordinance protects consumers and aids local firms by making it more difficult for outside competition to enter the market.