Calculate the Required Rate of Return for Climax Inc

question 113

Multiple Choice

Calculate the required rate of return for Climax Inc.,assuming that (1) investors expect a 4.0% rate of inflation in the future,(2) the real risk-free rate is 3.0%,(3) the market risk premium is 5.0%,(4) the firm has a beta of 1.00,and (5) its realized rate of return has averaged 15.0% over the last 5 years.

• A)10.29%
• B)10.83%
• C)11.40%
• D)12.00%
• E)12.60%

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Definitions:

Trade Deficit

A situation in which a country's imports of goods and services exceed its exports, resulting in a negative balance of trade.

Exports

Goods, services, or technology sent out of a country to be sold in another.

Imports

Goods and services purchased from foreign producers, brought into a country.

Trade Deficit

A situation where a country imports more goods and services than it exports, resulting in a negative balance of trade.