Alpha Inc'S Beta Is 1

question 16

Multiple Choice

Alpha Inc.'s beta is 1.2, the risk-free rate is 10 percent, and the market risk premium is 5 percent. Which of the following is Alpha's cost of retained earnings using the capital asset pricing model (CAPM) approach?

• A) 8 percent
• B) 10 percent
• C) 12 percent
• D) 14 percent
• E) 16 percent

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Definitions:

Host-Country National

An individual from the country where a foreign subsidiary is located and who works for that subsidiary.

Expatriates

Individuals who live and work outside their native country, often for professional assignments.

Expatriate

An individual who resides in a country other than their native country, often for work purposes.

Host-Country National

A citizen of the country where a foreign subsidiary or operation is located, employed by the subsidiary.