Corp Has a Beta of 1

question 70

Multiple Choice

Corp has a beta of 1.5 and is currently in equilibrium.The required rate of return on the stock is 12.00% versus a required return on an average stock of 10.00%.Now the required return on an average stock increases by 30.0% Neither betas nor the risk-free rate change.What would CCC's new required return be?

• A)14.89%
• B)15.68%
• C)16.50%
• D)17.33%
• E)18.19%

Evaluate the profitability of special orders and understand the impact of capacity on production decisions.

Understand the concepts of incremental revenue and incremental costs in the context of special orders.

Recognize the relevancy of cost and revenue information in making outsourcing decisions.

Understand the strategies for emphasizing positive information and de-emphasizing negative information in professional communications.

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Definitions:

Net Income

Net income is the total earnings of a company after all expenses and taxes have been deducted from revenues, indicating the company's profitability over a specific period.

Sales

The total amount of money received by a company for goods or services sold during a certain time period.

Margin of Safety Ratio

This ratio measures the difference between actual or expected sales and sales at the break-even point, indicating the buffer against a loss.

Dollar Amount

Refers to the value or cost of something expressed in units of currency.