1. If the market risk premium is 7%, the risk-free rate is 2% and the...
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Accounting
1. If the market risk premium is 7%, the risk-free rate is 2% and the beta of a stock is 0.5, what is the expected return of the stock?
a.4.5%
b.3.5%
c.2.5%
d.5.5%
2. If the market risk premium is 7%, the risk-free rate is 2% and the beta of a stock is 0, what is the expected return of the stock?
| a. | 5% | |
| b. | 0% | |
| c. | 7% | |
| d. | 2% |
3. A stock with a positive beta will move in the _____________ direction of the market. A stock with a beta greater than 1 will be _____________ sensitive to market movements.
| a. | opposite; less | |
| b. | same; less | |
| c. | same; more | |
| d. | opposite; more |
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