Rainbow Mining Pty Ltd Is Concerned That Opening a New

question 8

Multiple Choice

Rainbow Mining Pty Ltd is concerned that opening a new credit line will affect its share price.Now the company has a risk return on its shares of 17.50%,determined by using a beta factor of 1.50.The risk free rate is 7%.
What is the risk premium for Rainbow Mining?

• A)10.50%
• B)5.50%
• C)7.00%
• D)10.00%
• E)16.00%

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Definitions:

Recessive Allele

An allele that produces its characteristic phenotype only when its paired allele is identical.

Dominant Allele

A dominant allele is one version of a gene that masks the presence of a recessive allele in the pair, meaning the trait it represents is expressed even when only one copy is present.

Codominance

A genetic scenario where two alleles of a gene are expressed equally in the phenotype of the organism, neither being recessive to the other.

Polygenic Inheritance

Refers to the contribution of a variety of genes—sometimes very many—to a particular trait.