The Risk-Free Rate of Return Is 4% and the Market

question 119

Multiple Choice

The risk-free rate of return is 4% and the market risk premium is 8%. What is the expected rate of return on a stock with a beta of 1.28?

• A) 9.12%
• B) 10.24%
• C) 13.12%
• D) 14.24%
• E) 15.36%

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Definitions:

Imperative

Essential or of vital importance; crucial.

Private Speech

Vocalization expressed aloud by an individual to themselves, often as a way to organize thoughts, plan actions, or problem-solve, particularly observable in children.

Self-Regulation

The ability to manage one's thoughts, emotions, and behaviors effectively in order to achieve personal goals or adhere to societal norms.

Sociable

The quality or state of being inclined to seek out and enjoy the company of others, often characterized by friendliness and a desire for social interaction.