The Expected Return for Zbrite Stock Calculated Using the CAPM

question 82

Multiple Choice

The expected return for Zbrite stock calculated using the CAPM is 15.5%.The risk free rate is 3.5% and the beta of the stock is 1.2.Calculate the implied market risk premium.

• A) 5.5%
• B) 6.5%
• C) 10.0%
• D) 15.5%
• E) 12.0%

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Definitions:

Qualified Employees

Workers who possess the necessary skills, education, and experience required to competently perform the tasks of a specific job.

Outside Employment

A situation in which an individual holds a job external to their primary place of employment, often to supplement income or gain additional experience.

Financial Capital Market

The complex set of institutions in which suppliers of capital (households that save) and the demand for capital (firms wanting to invest) interact.

Institutions

Structures and mechanisms of social order governing the behavior of a set of individuals within a given community, such as legal codes, money, and schools.