The Expected Rate of Return on Rewind Industries Is 2

question 54

Multiple Choice

The expected rate of return on Rewind Industries is 2.5 times the 12 percent expected rate of return from the market. What is Rewind's beta if the risk-free rate is 6 percent?

• A) 2
• B) 3
• C) 4
• D) 5
• E) 6

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Definitions:

Graphing Calculator

A graphing calculator is a handheld calculator capable of plotting graphs, solving equations, and performing various mathematical operations with functions and variables.

X-intercepts

Points where a graph crosses the x-axis, representing the values of the variable when the output or y-value is zero.

Extraneous Solutions

Solutions that emerge from the process of solving an equation but do not satisfy the original equation.

Equation

A mathematical statement that asserts the equality of two expressions, typically represented by the symbol "=".