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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Your estimate of the market risk premium is 9%. The risk-free rate of return is 4% and General Motors has a beta of 1.2. What is General Motors' cost of equity capital? ..... O A. 14.1% B. 15.5% C. 13.3% D. 14.8%
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If a firm's beta is 1.1, the risk-free rate is 6%, and the expected return on the market is 14%, what will be the firm's cost of equity using the CAPM approach? Select one: a. 14.80% b. 21.40% c. 8.80% d. 15.40% e. 22.00%
The current risk-free rate of return (rRf) is 4.67% while the market risk premium is 5.75%. The Burris Company has a beta of 0.92. Using the capital asset pricing model (CAPM) approach, Burris’s cost of equity is? A 9.96 B) 8.964 C) 11.952 D) 10.458
Risk free rate = 5.00%; market return = 11.00%; and beta = 1.05. How much is the firm's cost of equity based on the CAPM? 11.30% 11.64% 11.99% 12.35%
You want to estimate the cost of equity of firm A using CAPM. Firm A has a beta of 1.3. Assume that the return on the market portfolio is 8.52%, and the risk-free rate is 3%. What is the cost of equity of firm A? Group of answer choices There is not enough information to answer this question. 10.17% 11.74% 14.21% 12.11%
The current risk-free rate of return is 4.67%, while the market risk premium is 6.63%. The D'Amico Company has a beta of 0.78. Using the Capital Asset Pricing Model (CAPM) approach, D'Amico's cost of equity is: a. 8.86%. b. 10.82%. C. 10.33%. d. 9.84%.
Dhofar Silicon Services has a B(Beta)= 1.4.The risk free rate on a treasury bill is currently 8.2% and the cost of equity is 0.1912, what is the market return. Select one: a. None b. 0.19 c. 0.16 d. 0.11 e. 0.14
Suppose your company has an equity beta of 0.5 and the current risk-free rate is 6.0%. If the expected market risk premium is 8.6%, what is your cost of equity capital? 6.1% 8.6% 11.1% 10.3%.
Consider the following information for Vine Inc.: Beta: 1.39 Risk-free rate: 7% Market Risk Premium: 11% What is the cost of the common equity of Vine Inc.? 22.29% 19.21% 32.02%
Assuming the CAPM or one-factor model holds, what is the cost of equity for a firm if the firm's equity has a beta of 1.2, the risk-free rate of return is 4%, the expected return on the market is 10%, and the return to the company's debt is 7%? A. 11.2% B. 11.4% C. 12.8% D. 12.9% E. None of these.
The cost of equity using the CAPM approach The current risk-free rate of return (rRF) is 3.86%, while the market risk premium is 6.63%. the Monroe Company has a beta of 0.92. Using the Capital Asset Pricing Model (CAPM) approach, Monroe's cost of equity is

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