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Corporate Finance · End Term · 13 Apr 2025 · January 2025 term

Question 27: Cisco Inc. has an expected rate of return of 10% and sta…

Question 27

+4 marksOne or more correct options

Cisco Inc. has an expected rate of return of 10% and standard deviation of rate of return of 15%. The expected market return is 6% and the standard deviation of market return is 5%. Cisco Inc. has a correlation coefficient with the market of 0.5. Then,

Select all that apply.

  1. A

    The market beta of Cisco Inc. is 1.5.

  2. B

    The market beta of Cisco Inc. is 3.

  3. C

    If the market returns a rate of return of 8%, then one would expect Cisco Inc. to have a rate of return of 13%.

  4. D

    If the market returns a rate of return of 8%, then one would expect Cisco Inc. to have a rate of return of 16%.

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Correct answers

  • A

    The market beta of Cisco Inc. is 1.5.

  • C

    If the market returns a rate of return of 8%, then one would expect Cisco Inc. to have a rate of return of 13%.

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Question 27 of 35 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 13 Apr 2025, in the January 2025 term (IIT M IMPROVEMENT AN EXAM QIM3 13 Apr 2025). It carries 4 marks.

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