The Required Rate of Return on the Daisy Corporation's Ordinary

question 53

Multiple Choice

The required rate of return on the Daisy Corporation's ordinary share is 11%, the current real rate of return in the market is 1%, and the market's risk- free rate of return is 4%. In this case, the risk premium associated with Daisy's stock is

• A) 5%.
• B) 7%.
• C) 8%.
• D) 6%.

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Definitions:

Technological Reliability

The probability that a device or system will perform its required function under stated conditions for a specified period of time.

Human Reliability

The study and application of psychological, physiological and engineering principles to improve the reliability and safety of systems through understanding human behavior and capabilities.

Pesticide-Resistant Insects

Insects that have developed immunity or tolerance to pesticides, making chemical control methods less effective.

Antibiotic-Resistant Bacteria

Bacteria that have developed resistance to one or more antibiotics, making infections harder to treat and increasing the risk of disease spread.