Alabaster Incorporated Has a Beta of 1

question 49

Multiple Choice

Alabaster Incorporated has a beta of 1.05,a cost of debt of 8% and a debt to value ratio of .7. The current risk free rate is 3% and the market rate of return is 12.5%. What is the company's cost of equity capital?

• A) 8.13%
• B) 10.25%
• C) 12.97%
• D) 13.13%
• E) 16.13%

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Definitions:

Operant Conditioning

A learning approach that relies on the use of incentives and consequences for one's actions.

Classical Conditioning

A method of conditioning in which pairing two stimuli repeatedly makes a response that is initially precipitated by the second stimulus to be precipitated by the first stimulus alone.

Secondary Reinforcement

A type of reinforcement where a stimulus reinforces a behavior because it is associated with a primary reinforcer.

Discovery Learning

An instructional approach that allows learners to explore and discover information through hands-on and interactive tasks, promoting deeper understanding.