Using the CAPM, the expected return for a company is 10%.

CIMA F3 Question Answer

Using the CAPM, the expected return for a company is 10%. The market return is 7% and the risk free rate is 1%.

What does the beta factor used in this calculation indicate about the risk of the company?

It has greater risk than the average market risk.

It has lower risk than the average market risk.

It has the same risk as the average market risk.

It is not possible to tell from CAPM.

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