The Expected Rate of Return on Rewind Industries Is 2

question 54

Multiple Choice

The expected rate of return on Rewind Industries is 2.5 times the 12 percent expected rate of return from the market. What is Rewind's beta if the risk-free rate is 6 percent?

• A) 2
• B) 3
• C) 4
• D) 5
• E) 6

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Definitions:

Deferred Gross Profit

Profit on installment sales that is not recognized immediately but deferred and recognized as payment is received.

Balance Sheet

An overview of a company's financial status, showcasing assets, financial obligations, and the stake of its shareholders at a precise moment.

Current Asset

Any asset expected to be converted into cash or used up within one business cycle or a year, including cash, inventory, and accounts receivable.

Construction Expense

Costs directly attributed to the construction of a building or infrastructure, including materials, labor, and overhead.