Use the Security Market Line to Determine the Required Rate

question 63

Multiple Choice

Use the security market line to determine the required rate of return for the following firm's stock.The firm has a beta of 1.25,the required return in the market place is 10.50%,the standard deviation of returns for the market portfolio is 25.00%,and the standard deviation of returns for your firm is also 25.00%.

• A)13.13%
• B)10.50%
• C)31.25%
• D)There is not enough information to answer this question.

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Definitions:

Intermittent Reinforcement

A conditioning schedule in which a reward is not given every time the desired response is performed, enhancing the response's resistance to extinction.

Peer Pressure

Influence exerted by a peer group, encouraging individuals to change their attitudes, values, or behaviors to conform to group norms.

Anti-Smoking Messages

Communications aimed at promoting the cessation of tobacco use, often highlighting the health risks of smoking and second-hand smoke exposure.

Overt Pressure

Visible or open acts of persuasion or coercion, often used to influence someone's behavior or decisions.