If the Beta of Amazon

question 30

Multiple Choice

If the beta of Amazon.com is 2.2, risk-free rate is 5.5% and the market risk premium is
8%, calculate the expected rate of return for Amazon.com stock:

• A) 15.8%
• B) 14.3%
• C) 35.2%
• D) 23.1%

---

Definitions:

ROE

Return on Equity, an indicator of financial efficiency determined by dividing the net income by the equity of shareholders.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Capital Intensity Ratio

A metric that measures a company's assets in relation to its labor, used to evaluate how much capital is used in production.

Full Capacity

The maximum level of output that a company can sustain over a period, usually determined by its physical, technical, or operational constraints.