The Risk-Free Rate of Return Is Currently 3 Per Cent

question 18

Multiple Choice

The risk-free rate of return is currently 3 per cent, whereas the market risk premium is 6 per cent. If the beta of Lenz, Ltd., share is 1.8, then what is the expected return on Lenz?

• A) 8.40%
• B) 10.80%
• C) 13.80%
• D) 19.20%

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Definitions:

Absolute Value Inequality

An inequality that involves the absolute value of a variable expression, requiring consideration of both positive and negative scenarios.

Interval

A range of values or a segment of a number line, often specified by its endpoints.

Manufacturing Process

A manufacturing process is the series of steps through which raw materials are transformed into a final product, involving various techniques and machinery.

Time Study

A work measurement technique for recording the times of performing a certain specific task to establish the standard time for an activity.