Stock in Globex Corporation Has a Beta of 0

question 144

Multiple Choice

Stock in Globex Corporation has a beta of 0.9. The expected market return is 10%, and T-bills are currently yielding 3.5%. The company's next dividend is expected to be $2 per share, and dividends
Have been growing at a 4% annual rate. If the stock sells for $25 per share, what is your best
Estimate of the company's cost of equity?

• A) 11.59%
• B) 10.68%
• C) 9.77%
• D) 8.86%
• E) 7.95%

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Definitions:

Linehaul Freight Carriers

Companies that specialize in the long-distance transportation of goods, typically from one city or metropolitan area to another.

Intermodal Trains

Rail vehicles designed for transporting cargo in a variety of container types, enabling efficient transfer between different modes of transportation like ships and trucks.

Transportation Management Systems (TMS)

TMS are advanced software aimed at optimizing the planning, execution, and optimization of physical movements of goods, ensuring efficient, effective, and cost-controlled transportation operations.

Equipment Shortages

Situations wherein the demand for specific equipment exceeds the available supply, often leading to operational delays and increased costs.