The ABC Music Club Charges a Price of $8 for a Cassette

question 94

Multiple Choice

The ABC Music club charges a price of $8 for a cassette and $16 for a CD. For an ABC Music Club member, the opportunity cost of a CD is

• A) 1/2 a cassette.
• B) 2 cassettes plus $16.
• C) 2 cassettes.
• D) None of the above answers is correct.

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Definitions:

Beta

An indicator of how much a stock's price movement deviates from the general market, where a beta greater than 1 signifies more volatility than the overall market.

Required Return

The minimum rate of return on an investment that investors expect or require, taking into account the risk level of the investment.

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, typically represented by the yield on government bonds.

Real Risk-Free Rate

The rate of return on a risk-free investment, such as government treasury bills, adjusted for inflation, representing the true earning power of the investment.