The Capital Asset Pricing Model Suggests That the Required Return

question 25

Multiple Choice

The capital asset pricing model suggests that the required return on a firm's stock is a positive function of:​

• A)the risk-free rate of interest.
• B)the market rate of return.
• C)the stock's beta.
• D)all of the above

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on standard cost.

Materials Price Variance

The difference between the actual cost of raw materials and the standard or expected cost, multiplied by the quantity of materials purchased.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or budgeted) variable overhead based on a standard rate.

Labor Efficiency Variance

measures the difference between the actual labor hours used and the standard labor hours expected for the production achieved, indicating labor efficiency.