Under the Following Conditions, What Are the Expected Returns for Stocks

question 139

Multiple Choice

Under the following conditions, what are the expected returns for stocks A and C?

• A) 14.1 percent and 17.65 percent
• B) 14.1 percent and 18.45 percent
• C) 17.65 percent and 18.45 percent
• D) 18.45 percent and 17.52 percent
• E) 19.55 percent and 17.25 percent

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Definitions:

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced, which decreases as more units are produced.

Output Level

The quantity of goods or services produced by a firm, industry, or economy in a given time period.

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit.

Marginal Cost

The cost of producing one additional unit of a product or service.