If IBM Has a Beta of 1

question 38

Multiple Choice

If IBM has a beta of 1.2 when the risk-free rate is 6% and the expected return on the market portfolio is 18%, the expected return on IBM is:

• A) 17.2%
• B) 20.4%
• C) 22.1%
• D) 23.6%

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Definitions:

Banks

Financial institutions that accept deposits from the public, offer savings and loans services, and play a critical role in the financial system.

Mediating

Mediating involves intervening in a dispute or conflict to help achieve a resolution by facilitating communication and negotiation between the parties involved.

Coordination Methods

Techniques or strategies used to align and integrate activities, efforts, and information within an organization or between entities to achieve a common goal.

Process Controls

Systems and methodologies implemented to monitor and control the processes within an organization to ensure they meet performance standards.