Use the Table for the Question(s)below

question 22

Multiple Choice

Use the table for the question(s) below.
-Suppose a risky security pays an average cash flow of $100 in one year.The risk-free rate is 5%,and the expected return on the market index is 13%.If the returns on this security are high when the economy is strong and low when the economy is weak,but the returns vary by only half as much as the market index,what risk premium is appropriate for this security?

• A)4%
• B)6.5%
• C)9%
• D)11%

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Definitions:

R00.0

Tachycardia, unspecified; a code representing abnormally rapid heart rate.

Ventricular Septal Defect

A heart defect due to an abnormal connection between the lower chambers of the heart (ventricles), leading to blood flow between them.

Q21.0

A code in the International Classification of Diseases, specifically denoting certain congenital malformations of the cardiac septa.

Arrhythmia

An irregular heartbeat, which can feel like a racing heart or fluttering, and can be harmless or a sign of a serious heart condition.