Linke Motors Has a Beta of 1

question 94

Multiple Choice

Linke Motors has a beta of 1.30,the T-bill rate is 3.00%,and the T-bond rate is 6.5%.The annual return on the stock market during the past 3 years was 15.00%,but investors expect the annual future stock market return to be 13.00%.Based on the SML,what is the firm's required return?

• A)13.51%
• B)13.86%
• C)14.21%
• D)14.58%
• E)14.95%

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Definitions:

Social-information Processing

The analysis and interpretation of social cues and information to understand and respond to social interactions.

Negotiating

The act of discussing to reach an agreement or compromise between parties with different views or objectives.

Overestimate

Involves estimating a value or number to be higher than it actually is, often due to bias or misinformation.

Social Skills

The abilities used to communicate and interact with others effectively, including verbal and non-verbal communication, empathy, and conflict resolution.