Suppose That the Median Price?to?earnings Ratio for the S&P 500

question 21

Multiple Choice

Suppose that the median price?to?earnings ratio for the S&P 500 is 20.If the long?run return on equity is 11.5 percent and the long?run growth in gross domestic product (GDP ) is expected to be 6 percent (3.5 percent real growth and 2.5 percent inflation) ,what is the cost of equity implied by the equity-denominated key value driver formula?

• A)7.9 percent.
• B)8.4 percent.
• C)8.9 percent.
• D)9.4 percent.

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Definitions:

Hippocampus

The hippocampus is a vital region of the brain involved in memory formation, spatial navigation, and the processing of emotional responses.

Procedural Memory

A type of long-term memory that involves the memory of how to perform different actions and skills, essentially the memory of motor skills.

Conscious Remember

The active process of recalling information or experiences that one is aware of and can articulate.

Hippocampus

A major component of the brain involved in memory formation and spatial navigation.