TJ Co Stock Has a Beta of 1

question 78

Multiple Choice

TJ Co. stock has a beta of 1.45, the current risk-free rate is 5.75, and the expected return on the market is 14 percent. What is TJ Co's cost of equity?

• A) 17.71 percent
• B) 21.20 percent
• C) 26.05 percent
• D) 28.64 percent

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Definitions:

Adaptive

The quality of being able to adjust to new conditions or environments; capable of modification for survival or improved function.

Social Norms

Unwritten rules or expectations within a society or group that dictate the behavior, appearance, and actions of its members, influencing conformity and social order.

Personally Distressing

A term often used to describe emotions or experiences that intensely disturb or distress an individual on a personal level.

Prognosis

A prediction of the likely course of a psychological (or physical) disorder.