The Risk-Free Rate of Return Is Currently 3 Percent, Whereas

question 15

Multiple Choice

The risk-free rate of return is currently 3 percent, whereas the market risk premium is 6 percent. If the beta of Lenz, Inc., stock is 1.8, then what is the expected return on Lenz?

• A) 8.40%
• B) 10.80%
• C) 13.80%
• D) 19.20%

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Definitions:

Effect Size

Represents the magnitude of the difference between groups in a study, providing insight into the practical significance of the research findings.

Statistical Significance

A mathematical indication that the difference observed between groups or the relationship within data is unlikely to have occurred due to chance alone, typically determined by a p-value.

Sample Size

The number of subjects or units included in a study or analysis.

Independent-Means T Test

An analytical technique employed to assess if the averages of two distinct groups differ significantly in a statistical context.