Calculate the Expected Return for a Industries Which Has a Beta

question 15

Multiple Choice

Calculate the expected return for A Industries which has a beta of 1.75 when the risk free rate is 0.03 and you expect the market return to be 0.11.

• A) 11.13%
• B) 14.97%
• C) 16.25%
• D) 22.25%
• E) 17.0%

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership equity spread among shareholders.

Retained Earnings

The amount of net income left over for the business after it has paid out dividends to its shareholders.

Price-earnings Ratio

A valuation metric for a company, calculated by dividing the market price per share by the earnings per share.

Net Income

The amount of profit left over after all expenses, taxes, and costs have been subtracted from total revenue.