A Firm with a Beta of 2.0 Should

question 72

Multiple Choice

A firm with a beta of 2.0 should:

• A)be forced to stop trading until the market perceives less risk.
• B)require twice the return on the market portfolio.
• C)require twice the market risk premium.
• D)require twice the risk-free rate of return.

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Definitions:

Peak Efficiency

The state of operation where a system or process achieves its maximum productivity with minimal waste and effort.

Break-Even Point

The point at which total costs and total revenues are equal, resulting in no net loss or gain for the business.

Long Run

In economics, the long run refers to the period during which all factors of production and costs are variable, allowing for full adjustment to changes in the market or economy.

Minimum Price

A minimum price is a legally imposed threshold set above the equilibrium price, below which a certain good or service cannot be sold, often to protect producers.