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

question 129

Multiple Choice

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

$\begin{array}{ll}\lambda^{0}=0.035 & b_{a, 1}=1.00 \\k_{1}=0.05 & b_{a, 2}=1.40 \\k_{2}=0.06 & b_{b, 1}=1.70 \\&b_{b, 2}=0.65\end{array}$

• A) 14.8% and 13.8%
• B) 19.8% and 29.5%
• C) 16.0% and 19.8%
• D) 16.9% and 15.9%
• E) None of the above

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Definitions:

Calcitonin

A hormone produced by the thyroid gland that helps regulate blood calcium levels by lowering them when too high.

Parathyroid Hormone

A substance secreted by the parathyroid glands responsible for controlling blood calcium concentrations and bone metabolism.

Synergistically

In cooperation such that the result or effect is greater than the sum of individual effects.

Digestive Tract

A series of hollow organs joined in a long, twisting tube from the mouth to the anus where digestion and nutrient absorption occurs.