Which One of the Following Stocks Is Correctly Priced If

question 47

Multiple Choice

Which one of the following stocks is correctly priced if the risk-free rate of return is 2.5% and the market risk premium is 8%? $$\begin{array} { l r c } \underline{\text { Stock } }& \underline{ \text { Beta } }& \underline{\text { Expected Return } }\\\text { A } & .68 & 8.2 \% \\\text { B } & 1.42 & 13.9 \% \\\text { C } & 1.23 & 11.8 \% \\\text { D } & 1.31 & 12.6 \% \\\text { E } & .94 & 9.7 \%\end{array}$$

---

Definitions:

High-Fat Foods

Foods that are rich in fats, often contributing to increased risk of obesity and heart disease when consumed in excess.

Cardiac Reactivity

The cardiovascular system's response to stress, including changes in heart rate, blood pressure, and vascular resistance.

Expression

The process by which information from a gene is used to synthesize a functional gene product, often a protein.

Anger

A strong emotion characterized by antagonism toward someone or something you feel has deliberately wronged you.