A Company Has a Beta of 2

question 94

Multiple Choice

A company has a beta of 2.91. If the market return is expected to be 16 percent and the risk-free rate is 4 percent, what is the company's risk premium?

• A) 11.64 percent
• B) 12.00 percent
• C) 22.91 percent
• D) 34.92 percent

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Definitions:

Public Good

A good that is non-excludable and non-rivalrous, meaning its consumption by one individual does not reduce its availability to others and people cannot be effectively excluded from using it.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used simultaneously by more than one person without reducing its availability to others.

Flat Road Tax

A fixed-rate tax imposed on vehicle owners, irrespective of the vehicle's value, emissions, or usage levels.

Optimal Area

The most efficient or advantageous point or region for a particular activity or the achievement of the highest benefit given constraints.