The Current Risk-Free Rate of Return in the Economy Is

question 4

Essay

The current risk-free rate of return in the economy is 6.5%. In addition, the market rate of return is currently 10%.
A. Given that a company's expected return on common stock is 12.5% what is the company's systemic risk level (beta)? Show your calculations.
B. Describe systemic risk.

---

Definitions:

Contingency-oriented

Being adaptable and making decisions based on the specific variables or circumstances of a situation rather than following a set plan or theory.

Veracity

Refers to the adherence to the truth and accuracy in actions and statements.

Beneficence

The ethical principle that involves acting in ways that promote the well-being and welfare of others.

Autonomy

The quality or state of being self-governing or independent; the ability to make decisions for oneself.