What Is the Expected Return on a Share with a Beta

question 54

Multiple Choice

What is the expected return on a share with a beta of 0.8, given a risk-free rate of 3.5% and an expected market return of 15.5%?

• A)3.8%
• B)13.1%
• C)15.6%
• D)19.1%

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Definitions:

Incremental Value

The additional value generated by undertaking a new project or decision, calculated as the difference between the value with and without the project.

Outstanding Stock

Outstanding stock is the total number of shares of a corporation that have been issued and are held by shareholders, including restricted shares owned by the company's officers and insiders.

Cash Deal

A transaction where payment is made in full using cash or cash equivalents rather than financing or trading.