A Project Has an Assigned Beta of 1

question 60

Multiple Choice

A project has an assigned beta of 1.24, the risk-free rate is 3.8%, and the market rate of return is 9.2%. What is the project's expected rate of return?

• A) 15.21%
• B) 11.41%
• C) 10.50%
• D)14.61%

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Definitions:

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting.

Capital Lease

A long-term lease agreement that designates the lessee (the person who rents the asset) as having the financial responsibilities and benefits of ownership.

Long-Term Asset

A long-term asset is an asset that is not expected to be converted into cash within a year and is used over a long period, such as property, plant, and equipment.

Intangible Asset

An asset that lacks physical substance and usually is very hard to evaluate, such as patents, trademarks, and copyrights.