A stock has an expected return of 12 percent and a beta of 1.16, and the expected return on the market is 11 percent. Here, we are asked to find the risk free rate. We will find it using CAPM formula-
ER= rf+(rm-rf)*beta
12= rf+(0.11-rf)*1.16rf
0.16rf=0.0076
rf=0.0076/0.16
=0.0475
= 4.75%
Therefore, 4.75% will be the risk free rate here.
What is risk free rate?
The risk-free interest rate is the theoretical rate of return on a risk-free investment. As such, it is a benchmark for measuring other investments that include an element of risk. Government bond yields are risk-free interest rates on the most commonly used assets.
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Answer: Insufficient competition but strong differentiation
Explanation:
Products can fail when there is sufficient competition with weak differentiation.
If instead there is insufficient competition, the product has a better chance of being successful because it is offering a service that not many other products can replicate. People will therefore buy more of it.
Also if the product is strongly differentiated, it means that the company took the extra step of adding features to the product to make it stand out and be more useful to the customer. This can increase the appreciation for a product which will increase it's demand this ultimately leading to the success of the product.
The correct answer i believe is “A. True” sorry if I’m wrong.