Scanlon Inc

question 45

Multiple Choice

Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital.You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 1.30.Based on the CAPM approach, what is the cost of common from retained earnings?

• A)9.67%
• B)9.97%
• C)10.28%
• D)10.60%
• E)10.93%

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Definitions:

Reporting Dealers

Financial institutions that are involved in the foreign exchange markets, providing detailed data on market activity to central banks.

Spread

The difference between the buy and sell price for a currency.

Foreign Exchange Trade

The act of buying and selling currencies with the aim of making a profit from the changes in their exchange rates.

Buy and Sell Price

The price at which an item can be purchased and the price at which it can be sold, respectively.