Stock in Globex Corporation Has a Beta of 0

question 224

Multiple Choice

Stock in Globex Corporation has a beta of 0.9. The expected market return is 10%, and T-bills are currently yielding 3.5%. The company's next dividend is expected to be $2 per share, and dividends have been growing at a 4% annual rate. If the stock sells for $25 per share, what is your best estimate of the company's cost of equity?

• A) 11.59%
• B) 10.68%
• C) 9.77%
• D) 8.86%
• E) 7.95%

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Definitions:

Low-context Cultures

Cultures where communication is explicit, messages are direct, and understanding depends less on contextual cues than on the explicit content of the communication.

Implicit Messaging

Communication that occurs through nonexplicit means, often involving nuanced or indirect cues, as opposed to straightforward, direct messaging.

Future Orientation

The degree to which a culture chooses future rather than immediate results.

High-assertion Culture

A workplace culture that encourages assertiveness, straightforward communication, and standing firm on one's decision or opinion.