USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 109

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You expect the risk-free rate (RFR) to be 3 percent and the market return to be 8 percent. You also have the following information about three stocks.

-Refer to Exhibit 7.2. What are the estimated rates of return for the three stocks (in the order X, Y, Z) ?

• A) 21.25 percent, 8.33 percent, 11.43 percent
• B) 6.20 percent, 2.20 percent, 8.20 percent
• C) 16.50 percent, 5.50 percent, 22.00 percent
• D) 9.25 percent, 10.5 percent, 7.5 percent
• E) 15.00 percent, 3.50 percent, 7.30 percent

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Definitions:

Random Assignment

A technique for assigning individuals to different groups in an experiment using randomization, to ensure that every participant has an equal chance of being placed in any group.

Cause-effect Inferences

Logical deductions that suggest a relationship where one event (the cause) leads to the occurrence of another event (the effect).

External Validity

The extent to which research findings can be generalized to settings or groups outside the study.

Confounding Variables

External factors that can influence both the dependent and independent variables, potentially biasing the results of a study.