Stock A has a beta (?) equal to 2.1 and Stock B has a beta equal to 0.7. Based on this information, according to the capital asset pricing model (CAPM), which of the following statements is correct?
A. ?The required rate of return for Stock A, rA, should be 2.1 times the required rate of return for Stock B, rB.
B. ?The risk premium associated with Stock A, RPA, should be 2.1 times the risk premium associated with Stock B, RPB.
C. ?The required rate of return for Stock A, rA, should be three times the required rate of return for Stock B, rB.
D. ?The risk premium associated with Stock A, RPA, should be three times the risk premium associated with Stock B, RPB.
E. ?The required rate of return for Stock A, rA, should be three times the risk premium associated with Stock A, RPA
Answer: D
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A. equity B. costs C. revenues D. growth
Which of the following represents the correct journal entry to record a taxable cash sale of $880 if the sales tax rate is 5%?
A. A debit to cash for $880, a credit to sales tax payable for $44, and a credit to sales revenue for $836. B. A debit to cash for $924, a debit to sales tax expense for $44, and a credit to sales revenue for $880. C. A debit to cash for $924, a credit to sales tax payable for $44, and a credit to sales revenue for $880. D. None of these answer choices are correct.