Calculate the Required Rate of Return for Climax Inc

question 113

Multiple Choice

Calculate the required rate of return for Climax 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) the firm 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:

Population

The total set of individuals, items, or data points that are of interest in a statistical analysis, from which samples may be drawn for study.

Descriptive

Descriptive refers to the statistical techniques or studies that aim to summarize or describe a set of data without making inferential predictions or determinations about the data.

Nominal

Describing a data classification that categorizes data without a natural order or ranking.

Inferential Statistics

The branch of statistics that allows for the making of predictions or inferences about a population based on a sample of data.