Given the Capital Asset Pricing Model,a Security with a Beta

question 15

Multiple Choice

Given the capital asset pricing model,a security with a beta of 1.5 should return ________,if the risk-free rate is 6% and the market return is 11%.

• A)13.5%
• B)14.0%
• C)14.5%
• D)15.0%

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Definitions:

Hybrid Costing

A costing method that combines elements of both job costing and process costing, typically used in manufacturing products that have some common characteristics and some unique features.

Upstream Costs

Expenses incurred in the preliminary stages of the product development cycle, such as research and development or raw material extraction.

Research And Development

Encompasses the investigative activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures.

Overhead Rate

A method for distributing overhead expenses to goods or services, usually depicted as a ratio or percentage.