Use the Information for the Question(s)below

question 4

Multiple Choice

Use the information for the question(s) below.
Suppose that the risk-free rate is 5% and the market portfolio has an expected return of 13% with a volatility of 18%.Monsters Inc.has a 24% volatility and a correlation with the market of .60,while California Gold Mining has a 32% volatility and a correlation with the market of -.7.Assume the CAPM assumptions hold.
-Monsters' beta with the market is closest to:

• A)1.3.
• B)1.0.
• C)0.6.
• D)0.8.

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Definitions:

Earnings Growth

The rate at which a company's earnings increase over a certain period, indicating financial health and profit potential.

P/E

Price-to-Earnings ratio, a valuation metric that compares a company's market share price to its per-share earnings, used to assess if a stock is over or under-valued.

Free Cash Flow

Cash generated by a company's operations minus capital expenditures, indicating the amount of cash a company can distribute to shareholders or reinvest.

Net Debt

The total debt of a company minus its cash and cash equivalents, indicating the actual debt burden on the company.