Nagel Equipment Has a Beta of 0

question 70

Multiple Choice

Nagel 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%

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Definitions:

Lungs

The primary organs of the respiratory system, responsible for gas exchange where oxygen is absorbed and carbon dioxide is released.

Heart

A muscular organ responsible for pumping blood through the circulatory system.

Anatomical Position

A standardized stance in human anatomy where the body is erect, the feet are slightly apart, arms are at the sides, and the head and palms face forward.

Palm

The inner part of the hand extending from the wrist to the bases of the fingers.