Use the SML Model to Calculate the Cost of Equity

question 3

Multiple Choice

Use the SML model to calculate the cost of equity for a firm based on the following information: the firm's beta is 1.5; the risk-free rate is 5%; and the market risk premium is 2%.

• A)8.0%
• B)9.5%
• C)10.0%
• D)12.0%

---

Definitions:

Transphobia

The fear, hatred, disbelief, or mistrust of people who are transgender, or the denial of their gender identity.

Homophobia

Prejudice, fear, or hatred directed against individuals who are homosexual or perceived to be, often resulting in discrimination.

Attitude Components

The three main aspects of attitude, including cognitive (beliefs or thoughts), affective (feelings or emotions), and behavioral (actions or reactions).

Example

A representative instance or case that is typical of a group or set, used to illustrate or explain a topic.