A Company Has a Beta of 4

question 14

Multiple Choice

A company has a beta of 4.5. If the market return is expected to be 14 percent and the risk-free rate is 7 percent, what is the company's risk premium?

• A) 7.0 percent
• B) 25.5 percent
• C) 31.5 percent
• D) 38.5 percent

---

Definitions:

Observational Learning

The process of learning by observing the behaviors of others and the outcomes of those behaviors.

Retains

The ability to keep or hold onto something, such as employees retaining their jobs or customers retaining loyalty to a brand.

Vividness

Vividness describes the intensity or clarity of something, making it stand out in memory or perception due to its brightness, distinctiveness, or detail.

Cognitive Technique

Methods or strategies employed to improve mental processes such as learning, memory, and problem-solving.