Use the Information for the Question(s)below

question 88

Multiple Choice

Use the information for the question(s) below.
Suppose that in the coming year,you expect Exxon-Mobil stock to have a volatility of 42% and a beta of 0.9,and Merck's stock to have a volatility of 24% and a beta of 1.1.The risk-free interest rate is 4% and the market's expected return is 12%.
-The cost of capital for a project with the same beta as Exxon Mobil's stock is closest to:

• A)11.6%.
• B)11.2%.
• C)12.8%.
• D)7.6%.

---

Definitions:

International Sales Contract

A legally binding agreement between parties from different countries for the sale and purchase of goods.

Market Price

The present cost at which a service or asset is available for purchase or sale on the market.

Notice of Breach

A formal notification given to a party indicating that they have failed to fulfill their contractual obligations.

Grade A

A classification denoting the highest quality or excellence in a certain category.