Which One of the Following Stocks Is Correctly Priced If

question 68

Multiple Choice

Which one of the following stocks is correctly priced if the risk-free rate of return is 3.6% and the market rate of return is 10.5%? $$\begin{array} { c r c } \underline{\text { Stock }} & \underline{ \text { Beta }} & \underline{\text { Expected Return }} \\\text { A } & .85 & 9.2 \% \\\text { B } & 1.08 & 11.8 \% \\\text { C } & 1.69 & 15.3 \% \\\text { D } & .71 & 7.8 \% \\\text { E } & 1.45 & 12.3 \%\end{array}$$

---

Definitions:

Community

A social group of any size whose members reside in a specific locality, share government, and often have a common cultural and historical heritage.

Chemical Brain Imbalance

A simplistic explanation for mental health disorders, suggesting that symptoms are caused by an imbalance of neurotransmitters in the brain.

Alcohol Use Disorder

A health disorder marked by a diminished capacity to cease or regulate alcohol consumption, despite negative impacts on social, professional, or medical well-being.

Natural Disaster

A catastrophic event resulting from natural processes of the Earth, such as earthquakes, hurricanes, floods, or tsunamis, causing significant damage and loss.