A Company Has a Beta of 3

question 40

Multiple Choice

A company has a beta of 3.75. If the market return is expected to be 20 percent and the risk-free rate is 9.5 percent, what is the company's required return?

• A) 33.250 percent
• B) 39.375 percent
• C) 48.875 percent
• D) 55.625 percent

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Definitions:

End-of-Period Adjustment

Adjustments made to the financial records at the end of an accounting period to ensure they accurately reflect the company's financial status.

Prepaid Expense

Expenditures paid in advance for goods or services to be received in the future, treated as an asset on the balance sheet until used.

Cash Payment

A transaction in which money is paid out or expended in the form of physical currency or through electronic funds transfer.

Management Services

Professional services provided to businesses, often involving strategic advisory, financial management, or operational improvements.