Tall Stand Timber Stock Has an Expected Return of 8

question 9

Multiple Choice

Tall Stand Timber stock has an expected return of 8.9%. What is the risk-free rate if the risk premium on the stock is 3.6%?

• A)4.70%
• B)5.30%
• C)5.60%
• D)6.50%
• E)12.5%

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Definitions:

Weighted Average

A calculation that takes into account the varying weights of different items in a dataset, commonly used in inventory costing.

Unit Selling Price

The price that a customer pays for one unit of a product or service.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, giving weight to some numbers more than others.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.