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:

Social Equilibrium

A state of balance and stability in society, where social forces, institutions, and structures are in harmony with each other.

Cross-cultural Contamination

The influence of one culture's symbols, language, and physical goods on another, which can sometimes alter the original culture's values and behaviors.

Cultural Perspective

The viewpoint that culture shapes individuals' perceptions, behaviors, and understanding of the world.

Proponents of Evil

Individuals or groups who advocate for or support actions, ideologies, or principles that are widely considered morally wrong or harmful.