If the Beta of Microsoft Is 1

question 2

Multiple Choice

If the beta of Microsoft is 1.13, risk-free rate is 3% and the market risk premium is 8%, calculate the expected return for Microsoft.

• A) 12.04%
• B) 15.66%
• C) 13.94%
• D) 8.65%

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Definitions:

Research and Development Expense

Costs associated with the development of new products or services, which are often categorized as non-recurring expenses within the operational budget.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financial activities.

Common Stock

Equity ownership in a corporation, with the right to share in its profits and vote in the annual general meetings.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenue.