What Is the Expected Market Return If the Expected Return

question 134

Multiple Choice

What is the expected market return if the expected return on Asset X is 20 percent, its beta is 1.5, and the risk free rate is 5 percent?

• A) 5.0%
• B) 7.5%
• C) 15.0%
• D) 22.5%

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Definitions:

Financing Activities

Transactions with creditors or investors used to fund either company operations or expansions.

Investing Activities

Refers to the purchasing and selling of long-term assets and other investments, not including cash equivalents, which are reported in a company's cash flow statement.

Indirect Method

A cash flow statement approach that adjusts net income for the effects of non-cash transactions and changes in working capital to calculate cash from operating activities.

Accumulated Depreciation

The cumulative total of depreciation costs noted for an asset since it was acquired.