Suppose the Beta of Exxon-Mobil Is 0

question 26

Multiple Choice

Suppose the beta of Exxon-Mobil is 0.65,the risk-free rate is 4%,and the expected market rate of return is 14%.Calculate the expected rate of return on Exxon-Mobil.

• A)12.6%
• B)10.5%
• C)13.1%
• D)6.5%

---

Definitions:

Owner's Equity

This represents the owner's claims on the assets of the business, calculated as the difference between the total assets and total liabilities of the business.

Corporation

A legal entity separate from its owners, with rights to own assets, incur liabilities, and sell stock, subject to corporate taxes.

Closing Entries

At the close of an accounting period, records are made to move balances from interim accounts to enduring accounts.

Accounting Cycle

The sequence of steps followed in the accounting process to track and report financial transactions, from the initial transaction to the financial statements.