Olson Corporation Has a Beta Coefficient of 1

question 13

Multiple Choice

Olson Corporation has a beta coefficient of 1.5 at a debt/assets ratio equal to 40 percent. The risk-free rate of return, rRF, is 5 percent and the market return, rM, is 9 percent. Based on the capital asset pricing model (CAPM) , what is Olson's required rate of return on its common equity?

• A)18.5%
• B)13.5%
• C)11.0%
• D)15.0%
• E)6.0%

---

Definitions:

Self-Determination

Self-Determination is the principle that a community or nation has the right to determine its own political status or form of government, without external influence.

Secret Agreements

Confidential understandings or deals made between parties, often kept hidden from the public and sometimes from certain stakeholders.

American Soldier

A member of the United States Armed Forces, representing the military forces of the United States and serving in various capacities both in peacetime and during conflicts.

Early-Twenties

A term referring to the age period from 20 to 23 years, often considered a time of transition into full adulthood and independence.