Company a Has a Beta of 0

question 84

Multiple Choice

Company A has a beta of 0.70, while Company B's beta is 1.20.The required return on the stock market is 11.00%, and the risk-free rate is 4.25%.What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.)

• A) 2.75%
• B) 2.89%
• C) 3.05%
• D) 3.21%
• E) 3.38%

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Definitions:

Nutritive Fluid

A liquid rich in nutrients that provides essential nourishment to organisms or cells for growth and maintenance.

Epididymis

A coiled tube that receives sperm from the testis and conveys it to the vas deferens.

Sexual Reproduction

The process by which organisms produce offspring through the combination of genetic materials from two different cells, typically involving male and female gametes.

Genetic Diversity

The total number of genetic characteristics in the genetic makeup of a species, contributing to its ability to adapt and survive changes.