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

question 132

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 prices one year from now for stocks X, Y, and Z are

• A) $53.55, $54.4, $55.25
• B) $45.35, $54.4, $55.25
• C) $55.55, $56.35, $57.15
• D) $50, $50, $50
• E) $51.35, $47.79, $51.58.

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Definitions:

Ritualistic Respect

The expression of reverence or honor through established, ceremonious practices within a cultural or religious context.

Emics

The locally relevant components of an idea; in cross-cultural psychology, aspects of a phenomenon that are specific to a particular culture.

Etics

The universal components of an idea; in cross-cultural psychology, aspects of a phenomenon that all cultures have in common.

Individualisms

Individualism is a social theory favoring freedom of action for individuals over collective or state control.