Suppose the Barges Corporation's Common Stock Has an Expected Return

question 55

Multiple Choice

Suppose the Barges Corporation's common stock has an expected return of 12%. Assume that the risk-free rate is 5%, and the market risk premium is 6%. If no unsystematic influence affected Barges' return, the beta for Barges is:

• A) 1.00.
• B) 1.17.
• C) 1.20.
• D) 2.50.

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Definitions:

Situationism

A theory in psychology that suggests human behavior is largely determined by surrounding circumstances rather than personal qualities.

Dispositionism

A theoretical perspective that attributes a person's behavior primarily to inherent traits, characteristics, or dispositions rather than to external circumstances.

Financial Wellbeing

The state of being financially healthy, where one has control over finances, the ability to absorb a financial shock, and the freedom to make choices that allow enjoyment of life.

Physical Attractiveness

The degree to which a person's physical traits are considered aesthetically pleasing or beautiful by others.