Use the Following Information to Answer the Question(s) Below

question 40

Multiple Choice

Use the following information to answer the question(s) below.

-If the expected return on the market risk 11% and the risk-free rate is 4%,then the expected return of investing in IBM is closest to:

• A) 9.1%
• B) 10.3%
• C) 11.0%
• D) 12.0%

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Definitions:

Lump Sum Subsidy

A fixed amount of money provided by the government or a body to support a business or market, which does not change with the level of output.

Per-Unit Subsidy

A financial incentive given by the government, reducing the cost of each unit of a good or service to either the producer or consumer.

Profit Maximization

A business objective to achieve the highest possible profit from operations, often by adjusting production, prices, and other variables.

Competitive Industry

An industry structure where many firms compete for market share, with no single company dominating the market.