The Risk-Free Rate of Return Is 3

question 111

Multiple Choice

The risk-free rate of return is 3.5% and the market risk premium is 7.5%.What is the expected rate of return on a stock with a beta of 1.28?

• A)9.12%
• B)10.24%
• C)13.10%
• D)14.24%
• E)15.36%

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Definitions:

Fixed Manufacturing Overhead

Costs that do not vary with the level of production, such as rent, salaries of permanent staff, and depreciation of factory equipment.

Fixed Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs attributed to the variation in produced units.

Materials Price Variance

The difference between the actual cost of materials and the standard cost, which can indicate inefficiencies or savings.

Direct Labor Rate Variance

The difference between the expected cost of direct labor at standard rates and the actual cost incurred.