Multiple Choice
The two-factor model on a stock provides a risk premium for exposure to market risk of 12%, a risk premium for exposure to silver commodity prices of 3.5%, and a risk-free rate of 4%. The beta for exposure to market risk is 1, and the beta for exposure to commodity prices is also 1. What is the expected return on the stock?
A) 11.6%
B) 13%
C) 15.3%
D) 19.5%
Correct Answer:
Verified
Correct Answer:
Verified
Q23: When all investors analyze securities in the
Q24: The measure of unsystematic risk can be
Q25: One extensive study found that about _
Q26: If enough investors decide to purchase stocks,
Q27: Consider the one-factor APT. The standard deviation
Q29: Fama and French claim that after controlling
Q30: According to the CAPM, the risk premium
Q31: The most significant conceptual difference between the
Q32: According to the capital asset pricing model,
Q33: Compensation of money managers is _ based