Suppose the Beta of Microsoft Is 1

question 47

Multiple Choice

Suppose the beta of Microsoft is 1.13,the risk-free rate is 3%,and the market risk premium is 8%.Calculate the expected return for Microsoft.

• A)12.04%
• B)15.66%
• C)13.94%
• D)8.65%

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Definitions:

Average Variable Cost

The per-unit variable cost of production, calculated by dividing total variable costs by the quantity of output produced.

Long-Run Scale

Refers to the time period in which all factors of production and costs are variable, allowing companies to adjust all inputs in response to market conditions.

Short-Run

A period in which at least one input is fixed, limiting the firm's capacity to adjust to changes in demand or market conditions.

Positive Profits

Financial gains that are greater than zero, indicating a company's revenues exceed its costs and expenses.