Your estimate of the market risk premium is 5%. The risk-free rate of return is 3.6% and General Motors has a beta of 1.6. What is General Motors' cost of equity capital? A. 10.4% B. 11% O C. 12.2% O D. 11.6%

Your estimate of the market risk premium is 5%. The risk-free rate of return is 3.6% and General Motors has a beta of 1.6. What is General Motors' cost of equity capital? A. 10.4% B. 11% O C. 12.2% O D. 11.6%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

18f

Your estimate of the market risk premium is 5%. The risk-free rate of return is 3.6% and General Motors has a beta of 1.6. What is General Motors' cost of equity
capital?
A. 10.4%
B. 11%
O C. 12.2%
O D. 11.6%

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