Determine the Market Risk Premium If the Risk Free Rate

question 53

Multiple Choice

Determine the market risk premium if the risk free rate is 2%, the company's Beta is 1.3 and its expected return is 11%.

• A)9.92%
• B)8.92%
• C)7.92%
• D)6.92%

---

Definitions:

Unearned Fees

Income received by a company for services to be provided in the future; recognized as a liability until the services are rendered.

Adjusting Entry

A financial record created at the conclusion of an accounting cycle to distribute income and costs to the timeframe in which they were genuinely incurred.

Office Equipment

Tangible assets such as computers, desks, and chairs, purchased for use in the conduct of business operations and not intended for resale.

Production Equipment

Machines and tools used in the manufacturing process to produce goods.