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:

Explanatory Style

A psychological attribute that indicates how people explain to themselves why they experience a particular event, either positive or negative.

Type A Personality

A personality trait characterized by high levels of competitiveness, impatience, and aggression.

Determined to Achieve

Having a strong resolve or commitment to reach a goal or fulfill an objective.

High Risk

A situation or condition that has a significantly increased likelihood of a negative outcome or danger.