The Required Rate of Return on a Stock

question 106

Multiple Choice

The required rate of return on a stock:

• A)is the risk-free rate plus a premium for the risk associated with the stock.
• B)is the return expected based upon currently available information.
• C)is the minimum return that generates trading.
• D)is entirely determined by the return on an average stock.

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Definitions:

Mutual Duties

Obligations or responsibilities that are shared reciprocally between parties in a contract or agreement.

Performance

The execution or accomplishment of a task, contract, or duty as required or agreed.

Tender

An offer to perform an obligation or to pay an amount specified in a contract.

Full Performance

The complete execution of all terms and obligations specified in a contract or agreement.