The Franko Company Has a Beta of 1

question 90

Multiple Choice

The Franko Company has a beta of 1.09. By what percent will the rate of return on the stock of Franko Company increase if the market rate of return rises by 3%?

• A) 1.91%
• B) 2.75%
• C) 3.27%
• D) 4.09%

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Definitions:

Journal Entries

Recorded transactions in the accounting journals that represent the financial activities of a company, detailing debits and credits for account adjustments.

Average Cost

A method of inventory valuation that calculates the cost of goods sold and ending inventory based on the weighted average cost of all items.

Cost Flow Assumption

An accounting principle that determines the method used to assign costs to inventory and to cost of goods sold, including FIFO, LIFO, and average cost methods.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company. This includes the cost of materials and direct labor.