Engler Equipment Has a Beta of 0

question 51

Multiple Choice

Engler Equipment has a beta of 0.88 and an expected dividend growth rate of 4.00% per year. The T-bill rate is 4.00%, and the T-bond rate is 5.25%. The annual return on the stock market during the past 4 years was 10.25%. Investors expect the average annual future return on the market to be 12.50%. Using the SML, what is the firm's required rate of return?

• A) 11.34%
• B) 11.63%
• C) 11.92%
• D) 12.22%
• E) 12.52%

---

Definitions:

Psychoanalytic View

The psychoanalytic view is a theory of personality organization and the dynamics of personality development that guides psychoanalysis, a clinical method for treating psychopathology, which was developed by Sigmund Freud.

Unconscious Motivation

Drives and desires operating below the level of conscious awareness, influencing behavior in significant ways.

Learning/Cognitive Perspective

An approach in psychology that emphasizes the role of mental processes in how people acquire knowledge, form beliefs, and develop attitudes and behavior.

Unconditional Positive Regard

A term used in client-centered therapy advocating for an accepting and nonjudgmental approach to the client by the therapist.