The Required Return on a Security Is 10%,the Risk-Free Rate

question 46

Multiple Choice

The required return on a security is 10%,the risk-free rate is 5%,and the return on the market is 14%.What is the beta of the firm?

• A) 0.14
• B) 0.55
• C) 0.83
• D) 1.00
• E) 1.40

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Definitions:

Annual Revenue

The total income generated by a business, organization, or individual within a fiscal year from its operations.

Initial Investment

The initial sum of money used to start a business project, purchase assets, or acquire starting capital.

Worst Payoff Rate

The lowest possible return or least favorable outcome from an investment or decision under a specific scenario.

ARM

In computing, a family of reduced instruction set computing (RISC) architectures for computer processors. In finance, an adjustable-rate mortgage.