Assuming a Market Rate Risk of 8 Percent and a Return

question 15

Multiple Choice

Assuming a market rate risk of 8 percent and a return on Treasury bills of 4 percent,what would the total estimate of the required rate of return be for a stock with a beta of 1.7?

• A)13.6 percent
• B)13.7 percent
• C)14.8 percent
• D)17.6 percent

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Definitions:

Consumption

The usage of goods and services by households, including the actions of selecting, purchasing, using, and disposing of products.

Double Taxation

The levy of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes).

Tax Base

The assessed value of all taxable income, property, assets, or other items that a government can tax.

Income Tax

A tax levied by governments on individuals or entities based on their income or profits.