Calculate the Expected Return for E Services Which Has a Beta

question 17

Multiple Choice

Calculate the expected return for E Services which has a beta of 1.5 when the risk free rate is 0.05 and you expect the market return to be 0.11.

• A) 10.6%
• B) 12.1%
• C) 13.6%
• D) 14.0%
• E) 16.2%

---

Definitions:

Fixed Resource

A resource whose quantity cannot easily be changed in the short term, such as land, buildings, or equipment.

Accounting Profit

The difference between total revenue and total explicit costs, not accounting for implicit costs, according to traditional accounting methods.

Entrepreneur's Potential Earnings

Entrepreneur's potential earnings are the anticipated income an entrepreneur expects to generate from their business ventures, considering the risks and opportunities involved.

Annual Lease

is a contract specifying the terms under which one party agrees to rent property from another party for a period of one year.