A Firm Has a Beta of 1

question 23

Multiple Choice

A firm has a beta of 1.2. The return in the market is 14%, and the risk-free rate is 6%. The estimated cost of common stock equity is ____.

• A) 6%
• B) 7.2%
• C) 15.6%
• D) 14%

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Definitions:

Personality

A unique set of emotional, thought, and behavioral patterns that define an individual's personal style of interacting with the physical and social environment.

Physiological Component

The aspects of psychological experience that are rooted in physical processes of the body, such as heart rate or hormone levels.

Mystery Novel

A genre of fiction that involves the solving of a mystery, typically involving a crime or a puzzling situation.

Achievement Motivation

The drive to pursue and meet (often challenging) goals, based on the desire to achieve success and excel.