Linke Motors Has a Beta of 1

question 115

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 10.00%.Based on the SML,what is the firm's required return? Do not round your intermediate calculations.

• A) 11.05%
• B) 13.48%
• C) 12.71%
• D) 10.17%
• E) 10.50%

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Definitions:

Short-Term Goals

The specific plans of action for the things you would like to accomplish right now or in the immediate future.

Long-Term Goals

Those things you decide to work for after developing a life plan for the future.

Taking Responsibility

The act of acknowledging and accepting the choices you have made, the actions you have taken, and the results they have led to.

Setting Priorities

Deciding ahead of time which tasks are the most, and least, important.