Calculate the Required Rate of Return for Mercury, Inc

question 4

Multiple Choice

Calculate the required rate of return for Mercury, Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) Mercury has a beta of 1.00, and (5) its realized rate of return has averaged 15.0% over the last 5 years.

• A) 10.29%
• B) 10.83%
• C) 11.40%
• D) 12.00%
• E) 12.60%

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Definitions:

External Attribution

The process of inferring that a person's behavior is due to situational factors, not to internal characteristics.

Organizational Citizenship Behaviors

Voluntary actions performed by employees that contribute to the overall positive functioning of an organization.

Entitlement At Work

A belief or expectation by employees that they deserve certain privileges or treatment in the workplace, regardless of their performance or behavior.

360-degree Feedback Method

A performance appraisal technique involving feedback from a circle of stakeholders, including supervisors, peers, subordinates, and sometimes customers.