Sun State Mining Inc

question 170

Multiple Choice

Sun State Mining Inc. ,an all-equity firm,is considering the formation of a new division which will increase the assets of the firm by 50 percent.Sun State currently has a required rate of return of 18 percent,U.S.Treasury bonds yield 7 percent,and the market risk premium is 5 percent.If Sun State wants to reduce its required rate of return to 16 percent,what is the maximum beta coefficient the new division could have?

• A) 2.2
• B) 1.0
• C) 1.8
• D) 1.6
• E) 2.0

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Definitions:

Organizational Politics

The use of power and social networking within an organization to achieve changes that benefit the individual or group.

Complex

Refers to a system or problem consisting of many interconnected parts or elements, which makes it difficult to understand, predict, or control.

Ambiguous

Lacking clarity or being open to more than one interpretation; not explicitly defined.

Organizational Politics

The practice of using power and social networking within an organization to achieve changes that benefit the organization or individual.