Calculate the Expected Return for B Services Which Has a Beta

question 100

Multiple Choice

Calculate the expected return for B Services which has a beta of 0.83 when the risk free rate is 0.05 and you expect the market return to be 0.12.

• A) 14.96%
• B) 16.15%
• C) 10.81%
• D) 17.00%
• E) 15.25%

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Definitions:

Factoring

Factoring is a financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Capital Investment Analysis

The process of evaluating the potential returns of an investment in fixed assets or long-term projects versus its costs.

Risk-Return Trade-Off

The principle that potential return rises with an increase in risk.

Leveraged Buyout Analysis

A financial transaction analysis in which a company is purchased using a significant amount of borrowed money to meet the cost of acquisition.