If the Risk-Free Rate Is 7 Percent, the Expected Return

question 73

Multiple Choice

If the risk-free rate is 7 percent, the expected return on the market is 10 percent, and the expected return on Security J is 13 percent, what is the beta of Security J?

• A)1.0
• B)1.5
• C)2.0
• D)2.5
• E)3.0

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Definitions:

Variable Costs

Costs that vary depending on the amount of production or business operations.

Lease Cost

The expense incurred from leasing equipment or property, typically categorized as an operating expense in financial statements.

Average Lease Cost

The mean expense incurred from leasing agreements, spread over the term of the lease, generally considered for assets such as equipment or real estate.

Sales Volume

The total quantity of products or services sold by a company within a specific period.