The Reward-To-Risk Ratio Is 6

question 79

Multiple Choice

The reward-to-risk ratio is 6.8 percent and the risk-free rate is 5.3 percent.What is the expected return on a risky asset if the beta of that asset is 1.03?

• A)7.00 percent
• B)12.00 percent
• C)12.02 percent
• D)12.07 percent
• E)12.30 percent

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Definitions:

Depreciation

An accounting method of allocating the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up.

Depletion Expense

The allocation of the cost of natural resources over their useful life, often used in industries like mining, quarrying, or oil extraction.

Mineral Rights

Legal entitlements that grant the holder the ability to mine, extract, or exploit minerals from the land.

Adjusting Entry

Journal entries made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.