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My broker just called and offered to sell me a stock with an expected return of 30% annually. If the risk-free rate is 2% and the expected return on the market is 16%, then how much riskier is this stock than the average stock in the market? Select one: O a. 1.0x (same risk) o b. 2.0x (twice as risky) O c.2.27x O d. 3.0x O e. None of the above.

My broker just called and offered to sell me a stock with an expected return of 30% annually. If the risk-free rate is 2% and the expected return on the market is 16%, then how much riskier is this stock than the average stock in the market? Select one: O a. 1.0x (same risk) o b. 2.0x (twice as risky) O c.2.27x O d. 3.0x O e. None of the above.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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My broker just called and offered to sell me a stock with an expected return of 30% annually. If the risk-free rate is 2% and the expected return on the market is 16%, then how much riskier is this stock than the average stock in the market? Select one: O a. 1.0x (same risk) O b. 2.0x (twice as risky) O c. 2.27x O d. 3.0x Oe. None of the above.
Transcribed Image Text:My broker just called and offered to sell me a stock with an expected return of 30% annually. If the risk-free rate is 2% and the expected return on the market is 16%, then how much riskier is this stock than the average stock in the market? Select one: O a. 1.0x (same risk) O b. 2.0x (twice as risky) O c. 2.27x O d. 3.0x Oe. None of the above.
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