If the Risk-Free Rate Is 6 Percent, the Return on an Average

question 30

Multiple Choice

If the risk-free rate is 6 percent, the return on an average stock is 10 percent, and the beta of a capital budgeting project is 1.50, the project's required rate of return from the project is _____. 

• A)12%
• B)24%
• C)4%
• D)19%
• E)21%

---

Definitions:

Logarithm

The exponent by which a base must be raised to yield a given number, commonly used in mathematical and scientific calculations.

Maple Tree

A type of tree belonging to the genus Acer, known for its distinctive leaf shape and for producing maple syrup.

Regression Analysis

A set of statistical processes for estimating the relationships among variables, often used to predict the value of a dependent variable based on one or more independent variables.

Fuel Efficiency

A measure of how far a vehicle can travel on a specific amount of fuel, typically expressed in miles per gallon (mpg) or liters per 100 kilometers (l/100km).