A Stock Has an Expected Return of 15

question 36

Multiple Choice

A stock has an expected return of 15.10% and a beta of 1.30. What is the risk-free rate if the market rate is 13.1%?

• A)6.43%
• B)6.92%
• C)7.01%
• D)7.30%
• E)7.90%

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Definitions:

Salvage Value

The calculated sale amount an asset is deemed to achieve after its useful life concludes.

Useful Life

The duration of time over which an asset is expected to be usable for its intended purpose.

Balance Sheet

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

Section Reporting

Section reporting involves the segregation of financial data from different sectors or segments of a business to analyze performance individually.