Stock A's Stock Has a Beta of 1

question 7

Multiple Choice

Stock A's stock has a beta of 1.30,and its required return is 15.25%.Stock B's beta is 0.80.If the risk-free rate is 2.75%,what is the required rate of return on B's stock? (Hint: First find the market risk premium. ) Do not round your intermediate calculations.

• A) 12.22%
• B) 10.44%
• C) 9.40%
• D) 11.38%
• E) 10.76%

---

Definitions:

Active Exploration

The energetic engagement and investigation of the environment or concepts to learn and understand new information or skills.

Moratorium

An identity status that characterizes those who are actively exploring alternatives in an attempt to form an identity.

Status Offense

A category of legal offenses that are only considered violations because of the age of the offender, such as truancy or underage drinking.

Illegal Matters

Issues or activities that are forbidden by law and subject to legal penalties if undertaken.