Using the capital asset pricing model (CAPM), Sun State determined that the required rate of return for a capital budgeting project it is evaluating is equal to 18 percent. If U.S. Treasury bonds yield 7 percent and the market risk premium is 5 percent, what is the project's beta coefficient?

A. 5.50
B. 2.20
C. 5.00
D. 12.50
E. 0.45


Answer: B

Business

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