The beta of Stock A is 2.1. The risk-free rate is 6 percent, and the market return is 13 percent. The expected rate of return of Stock A is 15.5 percent. Based on the above information, which of the following statements is true?
A. An investor should buy Stock A because its expected rate of return is less than the required rate of return.
B. An investor should buy Stock A because its expected rate of return is greater than the required rate of return.
C. An investor should not buy Stock A because its expected rate of return is greater than the required rate of return.
D. An investor should not buy Stock A because its expected rate of return is less than the required rate of return.
E. An investor should be indifferent towards buying or selling the stock.
Answer: D
You might also like to view...
The method of reporting cash flows from operating activities under which income is adjusted for transactions impacting both net income and cash flows, but in different ways, is called the
a. direct method. b. indirect method. c. combination method. d. adjusted method.
What is the best course of action when asked a difficult or complex question?
A) Ask for clarification. B) Give a simple, direct answer. C) Ask audience members to weigh in on the subject. D) Give a vague answer and move on to the next question or new topic. E) Offer to get a complete answer as soon as possible, after the presentation.
The advertising slogan, "We bring good things to life," used by General Electric to market itself, is an example of ________ marketing
A) person B) corporate image C) internal D) place E) niche
Semicolons used to link complete thoughts do not require _________________
a. complete sentences b. conjunctions c. verb clauses d. other punctuation