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

question 54

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 new prices now for stocks X, Y, and Z that will not allow for arbitrage profits are

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

---

Definitions:

Medullary Respiratory Center

A region in the medulla oblongata of the brain that regulates the rate and depth of breathing.

Ventral Respiratory Group

The ventral respiratory group is a cluster of neurons located in the medulla oblongata that plays a crucial role in regulating the rhythm of breathing.

Intercostal Muscles

Muscles located between the ribs that play an essential role in the mechanics of breathing.

Diaphragm

A large, dome-shaped muscle located below the lungs that plays a key role in breathing by contracting and relaxing to alter the size of the thoracic cavity.