The Required Return on Beta Stock Is 14

question 1

Multiple Choice

The required return on Beta stock is 14%. The risk-free rate of return is 4% and the real rate of return is 2%. How much are investors requiring as compensation for risk?

• A) 8%
• B) 10%
• C) 12%
• D) 14%

---

Definitions:

Marginal Costs

The additional cost incurred by producing one more unit of a good or service; this cost can vary with the level of production.

OPEC

The Organization of the Petroleum Exporting Countries, a group consisting of 13 of the world's major oil-exporting nations.

Perfectly Competitive Market

A market in which all participants are price-takers.

Tacit Collusion

An unspoken, illegal agreement among competitors to avoid competing directly, often leading to higher prices.