If the Risk-Free Rate Is 6 Percent, the Return on an Average

question 16

Multiple Choice

If the risk-free rate is 6 percent, the return on an average stock is 10 percent, and the beta of this project is 1.50, then the expected return from the project is _____.

• A) 12%
• B) 24%
• C) 4%
• D) 19%
• E) 23%

---

Definitions:

Supply and Demand

Economic model of price determination in a market, showing the relationship between the quantity of goods that producers wish to sell at various prices and the quantity consumers wish to buy.

Specific Tax

A fixed amount taxed per unit of a good or service, as opposed to a percentage of the price.

Fraction

A numerical quantity that is not a whole number, represents a part of a whole, typically written with a numerator and a denominator separated by a slash.

Consumers

Individuals or households that use goods and services generated within the economy.