An Asset's Beta Can Be Used to Compute Its Discount

question 121

Multiple Choice

An asset's beta can be used to compute its discount rate for an NPV calculation because the discount rate is equal to:

• A) r_f + b(r_m + r_f).
• B) r_f - b(r_m + r_f).
• C) r_f - b(r_m - r_f).
• D) r_f + b(r_m - r_f).
• E) beta itself.

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