Overall Cost of Capital: What Is the Beta of a Company

question 1

Multiple Choice

Overall cost of capital: What is the beta of a company whose equity has an expected return of 21.3 percent when the risk-free rate of return is 7.0 percent and the expected return on the market is 18.0 percent?

• A) 0.79
• B) 1.30
• C) 1.57
• D) none of the above

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Definitions:

Gross Profit Rate

The gross profit rate is a financial metric indicating the percentage of revenue that exceeds the cost of goods sold, showcasing the efficiency of a company in managing its production costs.

Merchandise Inventory

Goods a company intends to sell in the normal course of business, tracked in an account for accounting and management purposes.

Estimated Cost

An approximation of the financial expenses associated with a project, product, or service before it is fully realized.

Physical Inventory

A process of counting all the physical goods and inventory in a store or warehouse at a specific point in time.