HAW Inc Has an Estimated Beta of 0

question 25

Multiple Choice

HAW Inc. has an estimated beta of 0.87. Given a forecasted market return of 9% and a T-bill rate 3%, using the index model and the adjusted beta, what is the forecasted return?

• A) 11.7%
• B) 10.2%
• C) 8.5%
• D) 7.8%

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Definitions:

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, essentially representing the owners' claim on the company.

Book Value

The net value of a company's assets found on its balance sheet, calculated as total assets minus intangible assets and liabilities.

Fair Market Value

The price at which an asset would change hands in a transaction between a willing buyer and seller, both having reasonable knowledge of all relevant facts.

Legal Parent

refers to the entity that owns or controls another entity through shareholding or other means, effectively having a controlling interest in another company.