As a Financial Analyst, You Are Tasked with Evaluating a Capital-Budgeting

question 45

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%, and
The expected market rate of return is 11%. Your company has a beta of 0.67, 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) 4%.
• B) 8.69%.
• C) 15%.
• D) 11%.
• E) 0.75%.

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Definitions:

Organizational Citizenship

The voluntary commitment beyond contractual tasks by employees, which contributes to the well-being and efficiency of the organization.

Criterion Competency

The specific skills, knowledge, and abilities that are crucial for successful performance in a particular job or role.

Placement

The process of assigning a person to a specific job or position suitable for their skills, qualifications, or preferences.

Line Managers

Managers who have direct responsibility over a particular unit or department within an organization, including the supervision of employees and the achievement of operational targets.