Multiple Choice
Carolina Insurance Company is considering the purchase of a fire insurance company. The fire insurance company has a beta of 2.5. If the risk-free rate is 8 percent and the market risk premium is 6 percent, the required rate of return that should be used to evaluate the insurance company is _____.
A) 13%
B) 23%
C) 18%
D) 11%
E) 14%
Correct Answer:
Verified
Correct Answer:
Verified
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