USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the Three

question 150

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the three stocks, stock X, stock Y, and stock Z, that have the following factor loadings (or factor betas) .
The zero-beta return ( $\lambda$ 0) = 3 percent, and the risk premia are $\lambda$ 1 = 10 percent and $\lambda$ 2 = 8 percent. Assume that all three stocks are currently priced at $50.
-Refer to Exhibit 7.9. The expected returns for stock X, stock Y, and stock Z are

• A) 3 percent, 8 percent, 10 percent
• B) 7.1 percent, 10.5 percent, 8.8 percent
• C) 7.1 percent, 8.8 percent, 10.5 percent
• D) 10 percent, 5.5 percent, 14 percent
• E) 14 percent, 5.5 percent, 12 percent

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Definitions:

Gastrulation

An early embryonic phase during which the single-layered blastula is reorganized into a multilayered structure known as the gastrula.

Uterine Cavity

The interior part of the uterus, where the embryo implants and develops during pregnancy.

Lanugo

The fine, downy hair covering the fetus.

Vernix

The waxy substance that sometimes covers an infant at birth.