A Higher Beta Decreases the Required Rate of Return

question 26

True/False

A higher beta decreases the required rate of return.

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Definitions:

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the level of goods or services produced.

Common Fixed Expenses

Expenses that remain constant in total over a relevant range of time or production volume and are shared by multiple business segments or products.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much revenue is contributing to cover fixed expenses and profit.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production, such as rent, salaries of permanent staff, and property taxes on a factory.