Hefty Stock Has a Beta of 1

question 26

Multiple Choice

Hefty stock has a beta of 1.2. If the risk-free rate is 7% and the market risk premium is 6.5%, what is the required rate of return on Hefty?

• A) 14.8%
• B) 14.4%
• C) 12.4%
• D) 13.5%

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Definitions:

Botanicals

Plant-derived substances used in health foods, supplements, and cosmetics for their potential benefits or therapeutic properties.

Rotenone

A chemical compound derived from certain plants used as an insecticide and piscicide due to its toxicity to mitochondria.

Pyrethrum

A natural insecticide made from the dried flower heads of certain chrysanthemum species, used to control pests.

Herbicide

Chemical substances used to destroy or inhibit the growth of unwanted plants, weeds, or vegetation.