A Company Has a Beta of 2

question 94

Multiple Choice

A company has a beta of 2.91. If the market return is expected to be 16 percent and the risk-free rate is 4 percent, what is the company's risk premium?

• A) 11.64 percent
• B) 12.00 percent
• C) 22.91 percent
• D) 34.92 percent

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Definitions:

X-bar Charts

A statistical tool used in quality control processes to monitor variations in the mean values of a process over time.

Average Outgoing Quality

The average quality level of units shipped to customers after defective units have been screened out or corrected.

Curve

A smoothly flowing, continuous line or surface that differs from a straight path by its direction gradually changing.

Percent Defective

Percent Defective is a quality metric that represents the percentage of units in a batch that are not meeting the required standards or specifications.