The Expected Return on KarolCo

question 22

Multiple Choice

The expected return on KarolCo. shares is 16.5 per cent. If the risk-free rate is 5 per cent and the beta of KarolCo is 2.3, then what is the risk premium on the market?

• A) 2.5%
• B) 5.0%
• C) 7.5%
• D) 10.0%

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Definitions:

T-score

is a type of standardized score that indicates how many standard deviations an individual's score is from the mean of a norm group.

Percentile

A percentile is a statistical measure indicating the value below which a given percentage of observations in a group of observations falls.

Mode

A measure of central tendency that represents the score with the greatest frequency in a distribution.

Group of Data

A group of data refers to a collection of related data points or information that are often analyzed together to identify patterns, trends, or insights.