A Company Has a Beta of 0

question 2

Multiple Choice

A company has a beta of 0.25. If the market return is expected to be 8 percent and the risk-free rate is 2 percent, what is the company's required return?

• A) 1.50 percent
• B) 3.50 percent
• C) 4.00 percent
• D) 13.50 percent

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Definitions:

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, such as purchasing stocks, bonds, or real estate.

Projected Sales

Forecasted revenue from goods or services that a company plans to sell over a certain period.

Value-based Pricing

A pricing strategy that sets prices primarily based on the perceived or estimated value of a product or service to the customer, rather than on its cost of production or historical prices.

Industrial Instrument

Industrial instrument involves tools and devices designed for industrial applications, including measuring, controlling, and monitoring processes.