Determine the Risk Free Rate If a Company's Rate of Return

question 7

Multiple Choice

Determine the risk free rate if a company's rate of return is 12%, its Beta is -1.2 and the expected return on the stock market is 14%.

• A)11.19%
• B)12.29%
• C)13.09%
• D)14.19%

---

Definitions:

Trade Balance

The variance between what a nation sells and buys from abroad in terms of goods and services.

National Saving

The total amount saved by a nation's households and businesses, plus government budget surplus, which can be used for investment.

Open-Economy Macroeconomic Model

A model that analyzes an economy that engages in international trade, considering the impact of exports, imports, and capital flows.

Tariffs

Tariffs are taxes imposed by a government on imported goods and services to protect domestic industries, raise revenue, or influence trade balance.