The Required Return on Beta Stock Is 14

question 67

Multiple Choice

The required return on Beta stock is 14%. The risk- free rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk?

• A) 14%.
• B) 10%.
• C) 8%.
• D) 12%.

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Definitions:

Deposit

Money placed into a financial institution for safekeeping, which can also earn interest depending on the type of account.

Semiannually Compounded Rate

An interest rate that is compounded twice a year, affecting the total amount of interest earned or paid.

Interest

The cost of borrowing money, typically expressed as an annual percentage of the loan amount.

Bank

A financial institution licensed to receive deposits, make loans, and offer various financial services, such as currency exchange and wealth management.