Find the Required Rate of Return for Equity Investors of a Firm

question 79

Multiple Choice

Find the required rate of return for equity investors of a firm with a beta of 1.3 when the risk free rate is 5% and the return on the market is 13.6%.

• A) 11.54%
• B) 13.08%
• C) 16.18%
• D) 18.02%

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Definitions:

Foreign Firm

A company that is based in one country while conducting business operations in one or more other countries.

Free Trade

An economic policy that allows imports and exports among countries with minimal or no tariffs, quotas, or other restrictions.

Chinese Product

Products manufactured in China, often highlighted in discussions about global trade, manufacturing practices, and economic policies.

American Manufacturers

Companies based in the United States that produce and sell goods within the country and/or internationally.