As a Financial Analyst,you Are Tasked with Evaluating a Capital

question 4

Multiple Choice

As a financial analyst,you are tasked with evaluating a capital budgeting project.You were instructed to use the IRR method and you need to determine an appropriate hurdle rate.The risk-free rate is 4 percent and the expected market rate of return is 11 percent.Your company has a beta of 1.4 and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past.According to CAPM,the appropriate hurdle rate would be ______%.

• A)13.8
• B)7
• C)15
• D)4
• E)1.4

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Definitions:

Pulse Pressure

The difference between systolic and diastolic blood pressure, reflecting the force that the heart generates each time it contracts.

Diastolic Blood Pressure

The pressure in the arteries when the heart rests between beats, indicated as the bottom number in a blood pressure reading.

Abdomen

The part of the body that contains the digestive organs, bounded by the pelvis and the thorax.

Stethoscope

A medical instrument used by healthcare professionals to listen to the internal sounds of a patient's body.