When Treasury Bills Yield 7

question 73

Multiple Choice

When Treasury bills yield 7.0% and the expected return on the market is 16%,then the risk premium on an asset is equal to:

• A) 9.0%.
• B) 16.0%.
• C) 9.0% times the asset's beta.
• D) 8.0% plus the risk-free rate.

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Definitions:

Direct Expenses

Costs that can be directly traced to producing specific goods or services and can vary with the level of production.

Indirect Expenses

Expenses that cannot be directly linked to the production of goods or services, such as administrative salaries and utilities.

Contribution Margin

The Contribution Margin represents the amount of revenue from sales that exceeds variable costs, contributing to covering fixed costs and generating profit.

Sales

The total amount of revenue generated by the selling of goods or services by a company within a specific period.