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

question 53

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%,the market risk premium is 5%,and the return on the market is 10%.

• A) 11.5%
• B) 13.0%
• C) 16.5%
• D) 18.0%

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Definitions:

Bailor's Negligence

This term relates to situations where the bailor (the owner of property that is loaned to another party, the bailee) fails to exhibit the care or disclosure expected, possibly leading to harm or loss.

Real Property

Land and anything permanently attached to it, such as buildings and trees.

Earth's Crust

The outermost layer of the Earth, composed of solid rocks and minerals, which varies in thickness and composition between the oceanic and continental crust.

Tangible Property

Physical assets that can be seen, touched, and valued, such as real estate, equipment, or goods.