The Common Stock of Pedestrian Automotive Has a Beta of 0.89

question 27

Multiple Choice

The common stock of Pedestrian Automotive has a beta of 0.89 and a standard deviation of 15.8 percent.The market rate of return is 12.25 percent and the risk-free rate is 2.9 percent.What is the cost of equity for this firm?

• A)11.22 percent
• B)9.16 percent
• C)9.48 percent
• D)11.80 percent
• E)10.45 percent

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Definitions:

L-Valine

An essential amino acid used in the biosynthesis of proteins, characterized by its branched-chain structure, important for muscle metabolism.

pH

A numeric scale used to specify the acidity or basicity of an aqueous solution, where a value of 7 is neutral, values less than 7 are acidic, and values greater than 7 are basic.

Alanine

A non-essential amino acid used by the body to build proteins and play a key role in glucose metabolism.

Distilled Water

Water that has been boiled into vapor and recondensed into liquid, removing impurities and dissolved minerals.