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

question 123

Multiple Choice

Under the following conditions, what are the expected returns for stocks Y and Z?

$\begin{array}{ll}\lambda^{0}=0.05 & b_{y, 1}=0.75 \\k_{1}=0.06 & b_{y, 2}=1.35 \\k_{2}=0.05 & b_{z, 1}=1.5 \\& b_{z, 2}=0.85\end{array}$

• A) 17.61% and 13.23%
• B) 16.25% and 18.25%
• C) 13.24% and 28.46%
• D) 14.83% and 17.69%
• E) None of the above

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Definitions:

Lower-cost Labour

Employment of workers at relatively lower wages, usually in contexts where labor costs significantly impact production expenses.

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture over others.

Intercultural Competencies

Skills and personal characteristics that help achieve success in cross-cultural situations.

Globalization

The worldwide interdependence of resource flows, product markets, and business competition.