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1 - If a stock's beta is equal to one, then
a) the stock's expected rate of return would be equal to the risk-free rate.
b) the stock's expected rate of return would be equal to the expected rate of the market
c) the stock's expected rate would also equal one.
d) the stock's expected rate would equal zero.
e) it is impossible for the stock's beta to equal one
2 - A stock's return has the following range of outcomes and probabilities:
Outcomes Probability of the Outcome
.03 .20
.08 .40
.13 .40
Answer & Explanation
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