CAPM Required Return a Company Has a Beta of 3

question 72

Multiple Choice

CAPM Required Return A company has a beta of 3.75. If the market return is expected to be 20 percent and the risk-free rate is 9.5 percent, what is the company's required return?

• A) 33.250%
• B) 39.375%
• C) 48.875%
• D) 55.625%

---

Definitions:

Collusive Agreements

Refers to arrangements between firms to limit competition, fix prices, or divide markets among themselves, often leading to higher prices for consumers.

Dominant Firm

A company with a major share of market sales, which has the power to influence market conditions and pricing.

Nash Equilibrium

A concept in game theory where no player can benefit by changing strategies while the other players keep theirs unchanged, leading to a stable state of the game.

Payoff Matrix

A table that shows the potential outcomes of different strategies in a game or decision-making situation for all involved players.