The Expected Return for Zbrite Stock Calculated Using the CAPM

question 53

Multiple Choice

The expected return for Zbrite stock calculated using the CAPM is 15.5 percent. The risk-free rate is 3.5 percent and the beta of the stock is 1.2. Calculate the implied market risk premium.

• A) 5.5 percent
• B) 6.5 percent
• C) 10.0 percent
• D) 15.5 percent
• E) 12.0 percent

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Definitions:

Propositions

Statements or assertions that express judgments or opinions which can be either true or false.

Categorical Propositions

Statements in logic that assert or deny something about all or some of the members of a category, involving a subject and predicate and following specific forms.

Middle Term

The term that appears in both premises of a categorical syllogism but not in the conclusion, connecting the other two terms.

Syllogism

A method of deducing an outcome from two provided or presumed statements.