Using the Capital Asset Pricing Model (CAPM), Sun State Determined

question 38

Multiple Choice

Using the capital asset pricing model (CAPM) , Sun State determined that the required rate of return for a capital budgeting project it is evaluating is equal to 18 percent. If U.S. Treasury bonds yield 7 percent and the market risk premium is 5 percent, what is the project's beta coefficient?

• A)5.50
• B)2.20
• C)5.00
• D)12.50
• E)0.45

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