Porter Inc's Stock Has an Expected Return of 13

question 69

Multiple Choice

Porter Inc's stock has an expected return of 13.25%,a beta of 1.25,and is in equilibrium.If the risk-free rate is 2.00%,what is the market risk premium? Do not round your intermediate calculations.

• A) 7.11%
• B) 8.91%
• C) 10.17%
• D) 9.00%
• E) 7.29%

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Definitions:

Barriers

Obstacles that prevent entry into a market or hinder competition within a market.

Market Structure

The features of a market, including its structure, that affect how competition and pricing are determined.

Monopolistic Competition

A common form of industry (market) structure characterized by a large number of firms, no barriers to entry, and product differentiation.

Perfectly Competitive

A market structure where there are many sellers and buyers, homogeneous products, and no single buyer or seller can influence prices.