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:

Ossicles

Small bones in the middle ear that transmit sound vibrations from the eardrum to the inner ear; includes the malleus, incus, and stapes.

Hammer

A tool with a heavy, typically metal head attached to a long handle, used for breaking things apart or driving in nails.

Motion Sickness

A condition characterized by a sense of nausea and, sometimes, vomiting that is brought on by the movement of one's body or the perceived movement of one's surroundings.

Fluid Movement

The motion of a fluid (liquid or gas) often studied in physics and engineering, related to fluid dynamics.