The Expected Return for a Stock, Calculated Using the CAPM

question 47

Multiple Choice

The expected return for a stock, calculated using the CAPM, is 25 percent. The risk-free rate is 7.5 percent, and the beta of the stock is 0.80. Calculate the implied return on the market.

• A) 7.50 percent
• B) 13.91 percent
• C) 17.50 percent
• D) 21.88 percent
• E) 14.38 percent

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Definitions:

Ecology Component

elements within the field of ecology that are considered part of the environmental system, including both biotic and abiotic factors.

Abstract Ideas

Thoughts or concepts that do not have physical or concrete existence but exist as mental representations.

Material Objects

Physical items or possessions that can be seen, touched, and owned, often used to denote wealth, status, or personal preference.

Ideology Component

Refers to the discrete elements that make up a broader ideology, influencing beliefs and perspectives.