The required return on ABC stock is 14%. The risk-free rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk?
The required return on ABC stock is 14%. The risk-free rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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CAN I GET HELP as soon as possible please
Explain your answer for each of them. Show all your work.
- The required return on ABC stock is 14%. The risk-free
rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk?
- A) 8%
- B) 10%
- C) 12%
- D) 14%
- The
efficient market hypothesis suggests that
A) investors should not try to outguess the market by constantly buying and selling securities. - B) investors do better on average if they adopt a "buy and hold" strategy.
C) buying into a mutual fund is a sensible strategy for a small investor.
D) all of the above are sensible strategies.
E) only A and B of the above are sensible strategies.
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