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:

Retests

The procedure of administering the same test multiple times to the same subjects at different points in time to measure changes or consistency.

Research Design

The framework or blueprint for conducting a scientific study, which includes the methods for collecting, analyzing, and interpreting data.

Cross-sectional Design

A research methodology that examines a population, or a representative subset, at a single point in time to make inferences about the population at that time point.

Age Differences

Variations in behaviors, abilities, experiences, or preferences that occur due to differences in individuals' ages.