Consider the CAPM

question 83

Multiple Choice

Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is 15%. What is the beta on a stock with an expected return of 17%?

• A) .5
• B) .7
• C) 1
• D) 1.2

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Definitions:

Compliance

The act of conforming to or following the rules, requests, or orders of others, often to gain approval or avoid conflict.

Scarcity

The economic principle that describes the limited availability of resources compared to the theoretically limitless wants and needs of individuals.

Dissonance

A state of mental conflict or inconsistency, often used to describe the tension arising from holding contradictory beliefs or attitudes.

Normative Influence

The pressure to conform to the expectations or norms of a group, influencing individuals to act in ways that are accepted by their social group.