The Risk-Free Rate of Return Is 2

question 100

Multiple Choice

The risk-free rate of return is 2.5% and the market risk premium is 8%.Rogue Transport has a beta of 2.2 and a standard deviation of returns of 28%.Rogue Transport's marginal tax rate is 35%.Analysts expect Rogue Transport's dividends to grow by 6% per year for the foreseeable future.Using the capital asset pricing model,what is Rogue Transport's cost of retained earnings?

• A) 16.4%
• B) 17.7%
• C) 19.6%
• D) 20.1%

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Definitions:

Gain Water

The process through which cells absorb water, which can happen in a hypotonic solution environment, leading to cell swelling or bursting in severe cases.

Cell

The smallest structural and functional unit of an organism, typically microscopic and consisting of cytoplasm and a nucleus enclosed in a membrane.

Turgor Pressure

The pressure of water pushing the plasma membrane against the cell wall of a plant or bacterium, providing rigidity to the cell.

Hypertonic

A solution that has a higher solute concentration than the cytoplasm of a cell, causing cell shrinkage.