Suppose You Observe the Following Situation Assume These Securities Are Correctly Priced

question 83

Multiple Choice

Suppose you observe the following situation: $\begin{array}{ccc}&& \text { Expected } \\\text { Security } & \text { Beta } & \text { Retumn } \\\mathrm{A} & 1.16 & .1137 \\\mathrm{~B} & .92 & .0984\end{array}$
Assume these securities are correctly priced. Based on the CAPM, what is the return on the market?

• A) 9.99 percent
• B) 11.42 percent
• C) 10.35 percent
• D) 9.78 percent
• E) 11.01 percent

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Definitions:

Budgeted Overhead

The estimated cost of all overhead expenses that are planned or expected to be incurred over a specific period.

Ending Inventory

The total value of all inventory a company has in stock at the end of its fiscal period, valuable for calculating cost of goods sold and gross profit.

Accounts Receivable

The amounts owed to a business by its customers for goods or services delivered on credit.

Budgeted Sales

The projected amount of sales revenue a company expects to earn over a specific period, based on historical data, market analysis, and estimated growth rates.