Company a Has a Beta of 0

question 83

Multiple Choice

Company A has a beta of 0.70,while Company B's beta is 1.00.The required return on the stock market is 9.00%,and the risk-free rate is 2.25%.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. ) Do not round your intermediate calculations.

• A) 2.03%
• B) 2.13%
• C) 1.66%
• D) 1.64%
• E) 1.52%

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Definitions:

Two-Layered Study

A research approach that examines a topic or phenomenon at two different levels of analysis or perspectives to gain a more comprehensive understanding.

Informal Social Networks

The unofficial and often not visible interconnections among individuals within an organization that influence the flow of information, facilitating social and professional interactions.

Structural Positions

The designated roles, responsibilities, and levels of authority within an organization's hierarchy.

Organizational Change

The process through which a company undergoes a significant transition in its operations, structure, or strategy.