The Expected Return on Mike's Seafood Stock Is 17

question 57

Multiple Choice

The expected return on Mike's Seafood stock is 17.9 percent. If the expected return on the market is 13 percent and the beta for Kiwi is 1.7, then what is the risk-free rate?

• A) 4.5%
• B) 5.0%
• C) 5.5%
• D) 6.0%

---

Definitions:

Interest Revenue

Income earned from lending money or depositing funds in interest-bearing accounts.

Present Value Factors

Numerical factors used to calculate the present value of a future amount by considering the time value of money and interest rates.

Operating Lease

A contract that allows for the use of an asset but does not convey rights similar to ownership, typically shorter term and cancellable.

Future Rentals

Expected or scheduled payments for the use of tangible assets (such as real estate or equipment) over the duration of a lease agreement.